Retirement is a time to enjoy life without worrying about work, but how do you make sure you can afford it, especially in a state like Illinois?
Let’s break it down.
How Much Money Do You Need?
Financial experts say that Americans aged 65 can expect to live around 19.4 more years. During that time, they’ll need roughly $987,000 to cover expenses. But this can vary depending on where you live. In Illinois, retiring comfortably will cost you about $1.1 million, which is on par with the national average.
Why Planning is Essential
Retirement planning isn’t just about money. It’s also about making decisions for your future, including who will inherit your assets and what kind of healthcare you want if you become ill. Talking to your family about these plans can prevent conflicts later on.
The Reality of Retirement Savings
Many Americans aren’t saving enough for retirement. The average person aged 55 to 64 has only $120,000 saved up. Even with Social Security, which pays around $1,694 per month on average, it’s not enough for a comfortable retirement.
Working Longer Isn’t Ideal
Because of this, more Americans are working past retirement age. In 2020, over 26% of people aged 65 to 74 were still working, and that number is expected to rise. But not everyone wants to work forever. So, it’s essential to figure out how much you’ll need to retire comfortably.
Calculating Your Retirement Needs
According to the Bureau of Labor Statistics, the average retiree spent $52,141 in 2021. Adjusting for factors like inflation and life expectancy, Illinois residents can expect to spend around $1.3 million throughout their retirement. This figure doesn’t include other sources of income like investments or pensions.
The Magic Number
When asked, Americans believe they’ll need about $1.8 million to retire comfortably. However, most people fall short of this goal. The average retirement account holds only $113,000, according to Vanguard.
Preparing for Retirement
With inflation and market volatility, it’s essential to plan wisely. Despite economic uncertainties, Americans are still saving around 12% of their income in retirement accounts. But it’s crucial to have realistic expectations about how much you’ll need.
Getting Professional Advice
Instead of focusing on a single large goal, financial planners recommend thinking about your income needs in retirement. By understanding your expenses and considering options like annuities and Social Security benefits, you can create a plan that works for you.
Finally, it’s always a good idea to talk to a financial advisor. They can help you understand your options and create a plan that ensures you can retire comfortably, whether you’re in Illinois or any other state.
In conclusion, retirement planning can seem daunting, but with careful consideration and professional guidance, you can ensure a comfortable and enjoyable retirement, no matter where you live.