Saving for Retirement 101

Laura Shin
Posted

Contemplating retirement can either have you dreaming of days filled with island getaways—or it can put a tremor in your lip as you wonder whether you’ll have enough to live on.

We know: Between staying on top of monthly bills, paying down debt and saving up for your kids’ education, it’s easy to put retirement planning on the back burner.

For just these kinds of reasons, many women (and men) don’t save up enough for retirement, often because they underestimate how much they’ll need to get by. 70% of people admit that they have never even tried to calculate how much they’ll need—they’ve just been guessing! When it comes to retirement income, we’re not just talking about funding luxurious trips to Paris—we are talking about knowing how you’ll pay for everyday things without a steady paycheck coming in.

RELATED: Retirement Savings by Age: How Do You Compare?

But never fear. LearnVest is here to help you make it to the retirement of your dreams. One of the crucial ingredients to retiring in style is getting started early—which means, oh, right about now.

Read on to find out more about what retirement is and exactly how you can map out a plan to get the retirement you want.

Retirement in a Nutshell

In short, retirement is how we live our lives when we stop working. At that point, we fill our days with whatever our heart desires—yoga, drawing classes, international travel, volunteering. And we do all that while living on what we have saved.

RELATED: 5 Ways to Retrain Your Brain to Save More for Retirement

Well, most of us. Some people may have additional sources of income, such as pensions, but those are rapidly becoming less common, and if you have one to look forward to, you already know it. Social Security also supplements retirement savings, but its future is uncertain, so we advise not relying on a future payday from the Social Security Administration.

The typical retirement age nowadays is 67, but usually, the deciding factor is whether you’ve built up a nest egg large enough to live on for the rest of your life.

Here’s Why Retirement Is So Important

Think about it for a second. Right now, if you’re like most people, your everyday life—food, shelter, clothing, transportation and entertainment—takes up a decent chunk of your budget, if not almost all of it. So how will you feed, clothe and house yourself—let alone take weekend trips or afford other luxuries—once your paycheck no longer rolls in? And how will you do that decade after decade?

Basically, sometime between now and your mid-60s, you need to amass enough money to live on for the rest of your life. And hopefully, you’ll still have some left over to give to your children and grandchildren, or to charity. Women should be especially enthusiastic about saving–they live on average five years longer than men.

So, how do you plan for all these years? We’ll tell you.

RELATED: How to Set Up a Retirement Account

  • KimberlyDi

    Luxurious Jetsetter?

    100% of today’s income? I don’t think the most of us have a 100% income that qualifies as a jetsetter. My full income, as many Americans, just pays the bills. I do put 10% away for 401k and nearly the same amount away for personal savings, but Jetsetter I will never be.