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Is your retirement program on track?

  • Published
  • By Paul "Vinnie" Venturella
  • Contributor
POPE AIR FORCE BASE, N.C. --  The first factor to consider is how much money in retirement you'll want to receive per year in today's dollars? Other factors include age to retire or stop working; length of time you plan to spend in retirement; estimated value of retirement accounts when you retire; retirement dollars received from employer plans (for example your military retirement); assumed rates of return prior to and during retirement and assumed rate of
inflation. 

The objective when determining how much you want in retirement is to determine how much to invest now and at what assumed rate of return to meet your goal. This will be combined with the employer plans you know you'll be receiving. 

This is a hypothetical example for illustrative purposes.. If you want to receive $48,000 (in today's dollars) for 40 years your account (or combination of accounts) will need to be approximately $840,000. This assumes an 8 percent rate of return and 3 percent inflation. To save that much money if your proposed retirement is 25 years from now; you'll need to save $18,000 per year using the same rate of return and inflation. 

To have adequate retirement funds you (and your spouse) should have multiple sources of income. These multiple sources may include your employer; your Individual Retirement Accounts; your personal savings; cash value life insurance; annuities and others. Notice I did not list Social Security. When I develop a program for a client; especially a younger one; I do not use that in my calculations. If you receive it; consider it 'icing on the cake,' but don't count on it. 

Determine what you'll need in retirement income then determine how much to start investing now to achieve that goal. It's achievable with a disciplined, consistent, and persistent investing program.