10. Know what you need. A survey by EBRI found that only 46 percent of Americans had estimated how much money they would need to retire—and 14 percent of those had guessed. It is wise to look at some estimates of longevity for your age and gender. Particularly for women, it may be far longer than you imagine. This longevity issue has serious implications for investment planning and is an increasing concern for the population.
While it can be daunting, it is important to have some sense of how much money you will need to retire with dignity. This is the first step towards building a “retirement savings budget” and starting down the path towards meeting that goal.
Those who have done a retirement needs calculation continue to be more likely than those who have not to say they are very confident about having enough money for a comfortable retirement (22 percent vs. 10 percent). Moreover, those who think they need to accumulate at least $1 million in retirement savings are six times as likely as those who think they need less than $250,000 to be very confident (36 percent vs. 6 percent).
Issues such as inflation (see #2) and longevity have significant impacts on the amount that you will need for retirement, and the sooner that you get an estimate of how much you need, the sooner you can start working to meet it.
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