A key part of retirement planning is to answer the question: “How much do I need to retire?” The answer varies by individual, and it depends largely on your income now and the lifestyle you want in retirement. Look out for answers to the above question in the following points.

• Saving vs. Investing
• How to Manage Your Investments
• How Much Should I Save Each Month?
• Average Retirement Savings
• Reduced Net Worth
• Missing Savings
• Grow Your Portfolio

Recent research from Schwab Retirement Plan Services illustrates two things. First, 401(k) participants believe they need $1.7 million, on average, to retire. And second, many are not on track to get there.

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Why is that the case? There may be multiple causes. But not knowing how much to save, when to save it, and how to make those savings grow can go a long way toward creating shortfalls in your nest egg. This leads many to wonder, “when it comes to retirement, should I save or invest?”

Saving vs. Investing

Schwab research shows that most people—64%—see themselves as savers, not investors. As a result, 54% of 401(k) participants tend to put additional retirement funds in a savings account instead of another investment account such as an IRA, brokerage account, or health savings account (HSA).

The trouble with this strategy is that savings accounts typically pay much lower returns (or nothing at all) compared to investment accounts. In the early and middle years of your career, you have time to recover from any losses. That’s a good time to take some of the risks that allow you to earn more with your investments.

The above point shows that your best bet might be investing your funds in a secured investment prior to retirement. But the question that comes to mind is, “How do I manage my Investments?”

How to Manage Your Investments

When it comes to 401(k) accounts, many people take a “set it and forget it” approach to saving and investing, according to the Schwab study. A third of the study participants who auto-enrolled in their 401(k) plan have never increased their contribution level. And 44% have never made a change to their investment choices.

You need to pay attention to and actively manage a 401(k) to really make it grow. That also applies to other investment accounts, including IRAs, brokerage accounts, and HSAs.

To accomplish this, you likely will benefit from professional help. In fact, 95% of Schwab survey participants said they would be “somewhat” or “very” confident about making investment decisions with help from a pro versus 80% if they had to do it on their own.

Sadly, with all of the tips above, statistics show that only one in 10 Americans understand the level of savings needed to retire and live in a fashion similar to their current standard, and only 14 percent of Americans are confident they’ll have enough to live on when they retire.

A big savings hurdle for some is an outstanding debt. If you have more debt than you can pay off, complete our form to get help reducing your debts quickly.

In addition, consider other goals you want to achieve when you retire. Do you want to travel to Europe once a year? Buy a little vacation house on the beach in Malibu? Fund your grandchild’s college education? Give your grandkids and great-grandkids a monthly stipend? If so, you need to consider the costs of each goal and build that into your savings goal.

So where do you stand? How much money would you really need to be able to retire and live comfortably for the rest of your life? And how much would you need to save each month? It depends largely on the lifestyle you’d like to lead in your senior years. To give you a better idea, here is a tip for you.

How Much Should I Save Each Month?

Once you know your goal, it’s time to figure out the amount to put away each month. Retirement calculators abound online, but the one offered by MSN Money is very straightforward. Enter your variables, including current age, desired retirement age, current income and the amount of income you wish to replace at retirement.

For instance, let’s say that you’re 30 years old, want to retire at age 65 and expect to live at least 25 years after retirement (age 90).

You make $50,000 per year and would feel comfortable with 80 percent of your pre-retirement income. Assuming a return on your investments of 6 percent —a fairly conservative rate — and a 3 percent inflation rate over time, you’ll need to save $1,437 per month to meet your goal.

This will put you on the right track, but you should consider other potential sources of income as well as any debt obligations.

Below are some areas you can focus on to help you raise more funds for your retirement.

Average Retirement Savings

Almost 40 million families in the United States have no retirement savings. Americans have an average retirement savings deficit of $4.3 trillion. Those are huge numbers and they cover families ranging between the ages of 25 to 64. These families have nothing for retirement as was discovered by The Employee Benefit Research Institute.

For those in the United States that actually have a retirement account balance, it was found that it averaged around $60,000. This was discovered by research done by the Federal Reserve. The expected balance for most people was around $228,900.

These are numbers to think long and hard about because for most couples it takes about $200,000 in savings to be secure because of the upward costs of medical treatment for the people of retirement age.

In an October 2017 study the median retirement balance by age was done at the Center for Retirement Research which is headed by the Federal Reserve they found:

Retirement Account Balance by age
AGE GROUP	401(k)/IRA Balance
35-44	$37,000
45-54	$80,000
55-64	$104,000

Reduced Net Worth

America is falling short in other financial areas as well as retirement. The median household net worth for families 35-44 years old found that they reported an annual income of $59,800, for 45-54 years old it is $124,200 with the people in the 55-64 age range coming in at a network of $187,300. This means that from the last survey done in 2013 the net worth rose 16 percent.

The Americans without any retirement savings are looking at only having their Social Security Benefits to living on during retirement. Social Security was never meant to be lived on. It was meant to help supplement the average worker’s savings.

Currently, the average social security benefit is around $1354.04. This is what a person would be making in a month if they worked full time at a minimum wage job. An added burden is the number of debt people is taking into retirement which has risen steadily for years.

Missing Savings

The gap for retirement is as wide as the gap for the American income gap. People who are higher earners are more likely to have retirement savings accounts with higher average savings than their counterparts. People who have little savings are also more likely to carry a lot of debt.

What makes this situation more unusual is the number of people with high incomes and very limited retirement savings if any at all. Many of these people have large mortgages they are paying off with kids in private school. They have a high standard of living, but if they had saved they would have a higher retirement.

Many of the people in the lower-income bracket may be unable to work into their later years because they are no longer physically able to do the job they did so because it is now too demanding or their employers decide to not keep them on. It is good to start saving even a little bit even when it is not easy. This is the same for even white-collar workers. It is always good to plan for retirement.

Grow Your Portfolio

You should have at least the equivalent of your yearly salary saved up by the time you hit 30. The experts are ones that think that your career and the savings you have should be well in hand by this age. They also are the ones that indicate that you should have your retirement savings between 9 and 11 your salary.

To be comfortable in your retirement you should have your savings be 10 to 15 percent your salary. This means saving above what is recommended and make sure you choose investments that will yield what you want them to and that you have low-fee investments included. If you are curious about how to do better or to adjust what do have.

So where are the American savings going? It seems American’s have trouble giving up the resent rewards for future rewards. This is hard especially hard when the future is nowhere near the present. It’s hard to think and plan that far in advance when it is so far away. It is also hard to imagine needing high levels of medical care or special foods later in life. It is easier and more enjoyable to spend our paychecks now.

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Having to care for the problems and cares of the present is difficult enough. Saving for retirement is difficult and having what we want now is more important. It is difficult especially when there are debts such as student loans, housing costs, and other expenses.

Final Thoughts

When it comes to your retirement, you should do what you can do save something. It is making hard choices that might not necessarily seem like good ones at the time. Even if you are making an above-average salary you can do more to save than what you currently are saving.

People are living longer, but there is no guarantee you will be able to work further into retirement which is making a larger savings gap. There are no guarantees you will be in good health either.

The safest thing to do is to save what you can do throughout your life and your career or careers. It is never too late to start but is encouraged to start as young as you can. It means making difficult choices sometimes, but it will be worth it later.