Retirement 101

5:31 PM, Sep 13, 2012   |    comments
  • Share
  • Print
  • - A A A +

WASHINGTON, DC (WUSA)--This isn't pretty. According to most of the financial experts, 75% of those born after 1945 are not saving enough for retirement.

$ AARP Retirement Calculator $

You would think after investing a lifetime into your job, when you retire, you could enjoy the fruits of your labor.

$ Money Magazine Retirement Calculator $

"The numbers are daunting," says Kerry Hannon, a personal finance editor for U.S. News and World Report and author of the new book, What's Next?  "I think the numbers are cruel."

$ Social Security Retirement Planner $

"A number I heard recently," says Hannon, "Is the average American only has $60,000 saved for retirement.  That is shocking."

$ Calculate Your Social Security Benefits $

According to Hannon everyone should have a 30-year plan for retirement. Make sure your savings can last that long because we are living longer, and need to plan for the worst.

$ What's Next $

This is how the numbers break down:

If you can live on $25,000 a year, then you will need to accumulate $625,000 in savings.

Need $50,000 a year to get by, then make sure you've saved $1.25-million.

How about $75,000 a year? Then make sure you've got $1.875 million stashed away.

If you want to take in $100,000 a year then you need $2.5-million in savings.

$150,000 a year means $3.75-million in savings.

$200,000 a year will take a minimum of $5-million in savings.

If you're looking to Social Security to help, below are the facts. If you earn $100,000 a year at the time of retirement, here's the most you can expect to get from Uncle Sam per year:

RETIREMENT YEAR/ SOCIAL SECURITY MAXIMUM

2012= $26,710

2013= $27,244

2014= $27,789

2015= $28,345

2016= $28,912

2017= $29,490

2018= $30,018

2019= $30,681

2020= $31,295

2021= $31,921

2022= $32,559

2023= $33,210

2024= $33,875

2025= $34,552

2026= $35,243

2027= $35,948

2028= $36,667

2029= $37,400

2030= $38,148

2031= $38,911

2032= $39,690

2033= $40,483

2034= $41,293

2035= $42,119

What about that Individual Retirement Account (IRA), 401K or company retirement plan? Well don't forget you will need to pay taxes on that money. So how much is your retirement savings account really worth? Here goes:

PRE-TAX BALANCE/ AFTER-TAX VALUE

$50,000/ $42,500

$100,000/ $80,000

$250,000/ $187,500

$500,000/ $350,000

$1,000,000/ $650,000

$5,000,000/ $3,000,000

You've heard it over and over again: start saving early. The earlier you start saving for retirement the quicker your money compounds.

For example, in order to accumulate $1-million by age 65 this is how much you need to invest each month (assuming you earn a 6% annual return):

START AT AGE/ REQUIRED MONTHLY INVESTMENT

20= $362.85

30= $701.90

40= $1,443.01

50= $3,438.57

The numbers are cruel.  So put down that latte, forsake that extra vacation and fancy car. Start saving!

Written by: Samara Martin Ewing
9NEWS NOW & WUSA9.COM

Most Watched Videos