Planning For Your Retirement Future

We lucky people of Baltimore have an investment company, T. ROWE PRICE, which has located its company headquarters in the downtown area. The company offers several different investment instruments for individuals, company investment benefits programs, and institutional investors. Once you do utilize their services, the company provides newsletters that give you information, not just about your investments, but also about saving for your future needs, their investment philosophy, and their perspective on market conditions.

So, it isn't unusual for those who work for the company to offer some basic investment advice. One important piece of information about which many people may be interested is - how much of your current income should you set aside in retirement investments and savings? Stuart Ritter, CFP, a senior financial planner at T. Rowe Price, presented his advice in a newsletter article.



The first step would be to estimate how much income you will need after retirement in order to maintain your present lifestyle and pay for current expenses. Since you no longer have the daily commute expenses, nor those of various payroll taxes or retirement savings, for the average person, that is probably about 75% of your income at retirement. Of course, income from Social Security plus any retirement pension, and other additional income would amount to about 25%, while the majority, 50%, should come from pre-retirement savings.

Next, how would that break down at your current level of income. For most people, that amounts to around 15% placed into pre-retirement savings, including any employer contributions. But, for many people that level of savings can be rather daunting, given current expenses. So, any percentage that can be set aside for your retirement years, from the start of your working life, can help to make a more comfortable lifestyle in your retirement years. Remember, you may live thirty years or more after your decision to retire.

If you start your retirement savings at a modest 3%, say, it generally helps to reassess your percentage saved for retirement whenever you receive a pay raise, or even every two to three or even up to five years. The higher the percentage of funds saved offers you a better lifestyle when you retire. Some employers allow you to change retirement savings percentages once or twice each year, so it's a good idea for you to reassess then. Others allow for increasing percentages automatically at particular intervals, and you might want to take advantage of those.

Saving throughout your work life leads to a brighter tomorrow.

The most important point is that you maintain, or even increase, your savings percentages throughout your work years. Keep in mind how much income it takes to maintain the lifestyle you would enjoy in those years and then maintain your commitment to saving the proper amount to get you there. You don't suddenly want to be faced with the difficult decision of what to cut from your life in your senior years because you won't be able to afford it any more. Not only is this great advice from Mr. Ritter, but my father taught my brothers and me the same method of savings. You'll thank yourself for considering your future needs and planning ahead.

The ultimate aim of pre-retirement investing.

Thanks for the information from this article in the T. Rowe Price Investor: http://individual.troweprice.com/retail/pages/retail/applications/investorMag/2015/summer/ask-t-rowe-price/index.jsp?placementGUID=SM_Facebook-Editorial-Individuals-Retirement-ND&sf14051562=1: and the above link.

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