Financial advisors say the estimates are not surprising, given the range in incomes in America. That’s one reason why many advisors recommend investors use their income to benchmark their progress in building a nest egg. For instance, Fidelity Investments, the nation’s largest provider of retirement accounts, suggests workers aim to save at least eight times their ending salary by retirement.
Are you saving enough for retirement?
For years, financial advisors recommended people save at least $1 million to enjoy a comfortable retirement. But given longer lifespans and concerns about the financial status of Social Security, is that target enough to fund a potentially decades-long retirement?
Well-off investors surveyed by asset manager Legg Mason in March said that they would need at least $2.5 million to maintain their lifestyles in retirement. And a recent survey by the Employee Benefits Research Institute found more than 1 in 10 workers overall think they’ll need to save at least $1.5 million to retire comfortably.
Advisors often estimate how much a client will need in retirement by calculating an income replacement rate based on the client’s current income. An 80 percent replacement rate is a common benchmark. That means if an investor makes $100,000 annually, he or she would need a portfolio that generates $80,000 in income each year plus annual increases to adjust for inflation. Read more…