Atlanta Financial Newsroom
As a financial advisor, this is a frequently asked question. How much money do I need to save to retire comfortably? In other words, what is my number?
Much has been written about this topic. Schwab recently released a survey of 1,000 401(k) participants across the country indicating that on average, Americans believe they need $1.7 million to retire. That may seem like a reasonable number, but is it? A recent CNBC poll showed that two-thirds of U.S. workers are either very or somewhat confident that they will be able to live comfortably throughout retirement. However, a study by the Employee Benefit Research Institute showed that only 42% of Americans have done any retirement calculations. And on top of that, according to Fidelity, the average 401(k) balance in the U.S. is $297,700 which is a far cry from $1.7 million.
So, where is the disconnect and how can you actually determine what your own “number” is?
Although every person’s situation is completely different, there are really five things to consider when determining how much you need to save for retirement. The impact of underestimating any of these factors could be catastrophic, so this is not the time for optimism. This is the time to be very clear-eyed about setting your goals and expectations. Let’s get started.
The Tax Cut and Jobs Act of 2017, which became effective for tax years starting in 2018, significantly impacted many taxpayers. The change impacting the most taxpayers was the enhanced standard deduction and loss of many itemized deductions. Tax forms were also presented differently making it difficult for taxpayers who reviewed their returns in detail to compare year-to-year. While there were many changes, there are still some important tax savings strategies that may help you pay less in taxes. Which ones apply to your situation? Ask yourself the following questions…
We are excited to announce Connolly Elizabeth Crowley, daughter of Charles and Erin Crowley, was born on June 21, 2019! Weighing in at 7lbs.,15oz., Connolly makes Charles and Erin the parents of two beautiful children; Connolly is Charles and Erin’s second child…
We are extremely excited to announce the promotion of Kimsey Bolinger from Client Services Associate to Senior Client Services Associate. Since her start date a couple years ago, she has thrown herself into all aspects of her job and become one of the key members of our Service Team.
At AFA, we hear our clients express concerns about two financial challenges more often than any others:
• Will I be ready to retire with the lifestyle I want?
• What can I do to protect myself from rising health care costs now and in the future?
Did you realize there is a single vehicle that can help you make progress in both areas? It’s called a health savings account (HSA), which is a government-regulated savings account that combines many of the tax benefits of a Flexible Spending Account and a 401(k), including:
• Your contributions to the plan are pre-tax (if offered through your employer) or tax-deductible (if established on your own). If funded through your employer’s plan, you also don’t pay FICA on the contributions, putting an extra 7.65% back in your pocket.
• Withdrawals for qualified medical expenses are tax-free (more about that below).
• The balance in your plan (that you don’t spend for medical expenses) grows tax-deferred and can be rolled over from year to year, supplementing other retirement savings.
Over the years we’ve seen plenty of research and studies claim that increases in income don’t correspond to increases in happiness. One such survey, using data from the Gallup World Poll, found that the optimal household income for emotional well being was between $60,000 and $75,000 per year. The research shows that beyond that threshold, the correlation between income and happiness flattens pretty dramatically. For many Americans – especially young professionals just getting started in their careers – this may seem like a bogus finding, but by going beyond the headlines we learn that a common reason for that drop-off in financial satisfaction is lifestyle creep.
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