42% of Baby Boomers Can’t Answer This Basic Retirement Question, Can You?

Planning for retirement can be complicated, and there are plenty of questions to ask yourself before you leave your job. How will you spend your free time? How will you pay for healthcare expenses? How much will you receive in Social Security benefits?

One surprising question many workers can’t answer, though, is how much they already have saved for retirement. Nearly half of workers across all generations and 42% of baby boomers (the generation closest to retirement) say they don’t know what they have in savings, according to a survey from Northwestern Mutual.

Knowing what you already have socked away in your retirement fund is the foundation of planning for your future. This question can be somewhat difficult to answer if you have several retirement accounts from multiple past employers, with your money spread across…

various 401(k)s and IRAs. However, when you’re unsure of how much you have saved, it’s tough to gauge whether you’re on track for retirement.

Measuring your retirement progress

When you know how much you currently have stashed away for retirement, it’s easier to tell whether you’re behind, ahead, or right on track. But first, you have to know how much you’ll need to have saved by the time you retire.

The easiest way to determine this number is to use a retirement calculator. Not all calculators are created equal, though, so be sure to check what factors are considered in the calculations. Some calculators will factor in Social Security benefits and inflation, for example, which can give you a more accurate snapshot of how much you really need to save.

An important factor when calculating your retirement number is the current amount you have in savings. So be sure to comb through all your various retirement accounts and add up how much is saved in each to get an accurate idea of how much you have total. If you simply guess how much you have, it could throw off your entire retirement plan. For instance, if you think you have more than you actually do, you may save less each month than you should while thinking you’re on track. Then once you reach retirement age, you’ll have less than you anticipated, and it will be too late to catch up.

Once you have a retirement number in mind and know how much you need to save each month to get there, take a look at the amount you’re setting aside right now. Are you currently saving less than you should? If you’re behind, can you increase your savings enough to catch up? When you know where you stand, you’ll have a better idea of how you need to adjust your retirement plan to reach your goals.

Saving more when you’re falling behind

The truth is most people are behind on their savings — even those who are nearing retirement age. The median amount baby boomers have saved in their retirement accounts is just $152,000, according to a report from the Transamerica Center for Retirement Studies. Also, the average American age 65 and up spends around $46,000 per year, the U.S. Bureau of Labor Statistics found. At that rate, the average retiree will burn through $152,000 worth of savings in just over three years.

If you know your savings are falling short, though, that’s the first step to making the necessary corrections to get back on track. Once you’ve determined how much you need to save by…

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