Blog post sponsored by Equitable.
Save for the lifestyle you want
How much do you need to retire?
Picturing yourself as a retiree may be hard if not impossible. But if you could envision those future years, you'd probably see a life full of activity and decades of health, happiness, and prosperity. No rocking chairs and lap shawls need apply.
The reality, however, is probably somewhere in between. The problem with the picture is that the pleasure and comfort of your later years depend, to an ever-increasing degree, on the actions you take today.
Americans used to count on a pension plus Social Security to get them through those "golden years." These days, people change jobs more often, rely on dual incomes, and manage their own retirement funds through defined contribution plans. By most estimates, you'll need between 60% and 100% of your final working years' income to maintain your lifestyle after retiring.
Saving is the key component of retirement income.
The accompanying pie chart shows the importance of saving now toward a retirement fund. Not only are Social Security benefits less significant, but also the sums are diminishing and the age at which you can begin to receive benefits is higher. You can contact Social Security at 1-800-772-1213 to learn what you can expect in benefits and when to expect them. Benefits are calculated on your earnings, with certain variable factors.
Alas, the responsibility for the bulk of your nest egg rests with you. Social Security represents approximately 33% of the aggregate income of Americans aged 65 and older, according to the Social Security Administration.
Also, as you begin thinking about how much you'll need for a comfortable retirement, you may be startled to learn the impact of inflation. At an average inflation rate of 3%, your cost of living would double in 24 years. Your annual income will need to increase each year even during retirement in order to keep up with the gradual rise in prices of everyday goods.
You'll also have to consider the likelihood of increased medical costs and health insurance as you grow older. The median nursing home cost for a private room, for instance, now runs more than $105,000 a year and could rise to over $140,000 per year by 2030, assuming an annual inflation rate of 3%.1
Sources of Retirement Income2
This chart represents a breakdown of income sources for all retirees (aged 65 and over).
Wherever you are in your financial journey, we can help.
Whether you’re just starting out, thinking about retirement or somewhere in between, investing in an Equitable Financial 403(b) retirement plan can help you pursue the financial future you want.
With an Equitable Financial 403(b) retirement plan, you can make tax-deferred contributions that could provide you with another source of income down the road — in addition to Social Security or an employer pension you may have.
Talk to an Equitable Advisors Financial Professional. Our experienced financial professionals can provide you with personalized support to help confidently build your financial future.
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Learn how Equitable helps educators prepare for all of life’s opportunities — now and throughout retirement.
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1 Genworth 2020 Cost of Care Survey, 2020.
2: ChartSource , DST Retirement Solutions, LLC, an SS&C company. Data is from Fast ® Facts & Figures About Social Security, published by the Social Security Administration, September 2017. Data is as of 2015 (latest available). ©2022 SS&C. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions. (CS000123)
3 This informational calculator is not created, owned or maintained by Equitable Advisors or its affiliates, nor has it been determined in our own testing to be precisely accurate. Equitable Advisors and its affiliates make no representation as to the calculator's accuracy, completeness or applicability with regard to any person's individual circumstances. The calculator provides only general estimates; its hypothetical results should not be relied upon as a basis for any financial, investment, or other decision or determination.
Important note: Equitable believes education is a key step toward addressing financial goals, and we've designed this tool as an informational and educational resource intended to facilitate the review of your current financial situation based on information and assumptions provided by you. This discussion and any hypothetical results or information provided herein do not offer or constitute investment advice and make no direct or indirect recommendation of any insurance, investment, financial product or investment option. Equitable and its affiliates do not provide tax or legal advice or services. Please consult with your tax and/or legal advisors regarding your particular circumstances. The needs, goals and circumstances of individuals are unique, and they require the individualized attention of a financial professional.
4 LIMRA, Not-for-Profit Survey, Q4 2022 results, based on 403(b) plan participants and contributions. This applies specifically and exclusively to Equitable Financial Life Insurance Company (Equitable Financial).
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