17 years is how much longer someone born in 2021 will live compared to someone born in 1921. An increase of nearly 28% from 60.8 years to 77.8 years as Notable Number 4 in the attached Weekly Market Review details.
Certainly, many of us will live well beyond our 78th year. As a retirement specialist, helping plan for the money to last as long as the retiree can sometimes be a tight rope walk, especially for those retiring with smaller nest eggs. With the increasing life expectancies, some are choosing to work longer. For those hoping to retire early, or even at their Full Retirement Age as defined by the Social Security Administration, the extended life expectancy underscores the need to make planning for retirement a financial priority sooner rather than later.
The secret is the earlier in your working career you make planning for retirement a major financial priority, the quicker the reality of retirement will arrive. So how much of a financial priority should retirement planning be? That depends on many factors, but it is reasonable to assume the earlier in life you hope to achieve a “work optional” status, the larger percentage of your current income you will need to invest.
While most professionals suggest a retirement savings rate of 12 – 15% of your current income, this assumes you save that amount your entire career and retire in your late sixties. Someone getting a late start to saving for retirement or hoping to retire earlier would need to dedicate a larger percentage of their income. The truth is that there are a multitude of variables when it comes to financially planning for retirement, but the number one determining factor (by far) on when you can retire with financial confidence is your retirement savings rate. The earlier in your career you can dedicate that 12%, 15%, or even more of your current paycheck for your future retirement paycheck, the bigger impact it will have on the date you can take those works boots off for the last time!
As always, we hope you find the Weekly Market Review both informative and interesting. Have a great week.
Trevor N. Coe, CFP®