Can You Afford 35 Years in Retirement?

Read on to see whether you're on track for a well-funded retirement.

May 17, 2014 at 3:05PM

Have you given serious thought as to how much money it will take to live comfortably during retirement? Do you feel confident, worried -- or maybe even scared? If you're afraid that you could outlive your retirement savings, you might not be surprised to hear that more than 69% of those working toward retirement are not confident they're doing a good job preparing financially, and most worry about having the money to cover even the most basic expenses during retirement .

Think about this: Our lifespans have increased to the point that some of us could spend more than 35 years in retirement. According to projections from the U.S. Census Bureau, approximately 20% of Americans will be 65 or older by the year 2050 -- and of those, about 400,000 will be at least 100 years old.

Whether you expect to live to 100, you should be confident you'll have enough income to maintain the kind of retirement lifestyle you want. The best way to gain this confidence is to have a plan in place to fund your retirement and make it last. Get started now with the following tasks:

  • Know what kind of retirement lifestyle you'd like. Most Americans are on track to replace 61% of their income in retirement , but a general rule of thumb is that you'll need to replace 70% to 80% of your pre-retirement income. You could need more or less depending on what you want to do in retirement. Picking up and moving to Florida or doing a lot of traveling might mean you need more, whereas staying in your current home or continuing to work part time means you could need less.
  • Play the numbers game. With the above in mind, try a retirement calculator to help get an idea of whether you're on track to meeting your retirement savings goal. Try different scenarios to see how much your income needs may vary depending on the lifestyle you choose.
  • Sock away more money each year to increase your retirement nest egg. Nobody ever complains about retiring with too much money, but retiring with too little can be a real problem. If you're concerned you haven't been saving enough for retirement, here are some tips that could help:

See if your employer-sponsored 401(k) has an automatic increase feature that you can take advantage of, and if it doesn't, set calendar reminders to increase your contributions manually. By increasing your contributions even 1% annually, you'll stash away more money without feeling it in your take-home pay. Consider this scenario: For an annual starting salary of $60,000 with an annual 3% raise, in 15 years you could have an extra $93,000 or more in your 401(k). 

If you are 50 or older, you can put away more cash via catch-up contributions: up to an additional $5,500 in a 401(k) and $1,000 in a traditional or Roth IRA in 2014.

Consider funneling bonuses and other cash windfalls into your retirement accounts.

  • Get professional advice. Remember when we told you that most Americans are on track to replace 61% of their income in retirement? By working with an advisor, you could increase that amount by 31%. That might make the difference between living comfortably in retirement or outliving your savings.

Don't let another year go by without knowing what you'll need in retirement and having a plan to make it happen. Retirement is a once-in-a-lifetime event -- there are no second chances -- and you deserve to get it right.

How to get even more income during retirement
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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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