How Much Do You Need to Retire? The Number May Shock You

The Wall Street Journal reported earlier this month that in order to live comfortably in retirement, you will need anywhere from 70% to 100% of your preretirement income. To help you calculate this, the Journal referred to the Cori Index. This index will help those who are between ages 55 and 64 calculate how much money they must have at age 65 to fund their retirement.

For example, at age 55, the index is $12.82 meaning that for every dollar of retirement income, you will need to have accumulated $12.82. If your goal is $80,000 of income starting at 65, you will need your retirement fund (IRA, 401k, investments, etc.) to have $1,025,600. If you are already age 60, this jumps to a Cori index of $16.05, requiring $1,284,000. These numbers do factor in an inflation rate of 2.5% per year, but the question is, can you achieve these numbers?

But this is not all you need to plan for. An average American couple retiring at age 65 today would need a present value lump sum of $293,000 to cover future health insurance premiums and out-of-pocket medical expenses over the remainder of their lives, i.e., expenses not paid by Medicare (source: Society of Actuaries).

$293,000? Most people do not have this amount set aside to live on in retirement let alone pay for unreimbursed medical expenses. If you are already age 55+ and have not started your planning, it may be difficult to achieve these goals, but if you are younger with more time for your planning and investments to work, these goals should be readily achievable. In either situation, reach out to your agent or planner to help guide you through the proper decisions for your personal goals.

Marvin H. Feldman, CLU, ChFC, RFC, President and CEO of Life Happens

by Marvin H. Feldman

Marvin H. Feldman, CLU, ChFC, RFC, is president of the Feldman Financial Group in Palm Harbor, Fla., and president and CEO of Life Happens. He is a 41-year Million Dollar Round Table member and was the 2002 president. He is a 33-year member of the MDRT Top of the Table and a past Top of the Table chairman. He also is the recipient of the 2011 John Newton Russell award, the highest honor bestowed on an individual by the insurance industry.

  1. I disagree with this assumption as needs after retirement are much lower. Most people live in a smaller hours which costs much less (or live in a place which is paid off). Also, with getting some money from social security the needs should be adjusted and this should reflect in the savings.

    By throwing large numbers at middle class people, a sense of hopelessness gets set and some people don’t even attempt to save. So it is essential to highlight this aspect to the common man

  2. It is challenging, don’t get me wrong. Let’s take the case of Roger, who makes about $60,000 a year. He brings home a paycheck every month in the amount of $3,200. In order to save 20% of his whole annual salary ($12,000), Roger would have to be willing to immediately take $1,000 of that take-home paycheck and put it straight into an investment and not touch it at all. This takes an amount of financial fortitude and willpower that, quite honestly, most Americans don’t have the courage to do.

  3. Way out of Wack!!! There are so many variables this isn’t even worth the read. Sounds like they just want you to sign up with someone so they can play with your money. Do it yourself.

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