You Need $338,000 to Retire

Now may be a bad time to retire, but more people are undoubtedly dreaming of the day. Many Americans have reported feeling chronically overworked, and rather than be rewarded for their efforts, many employers have cut wages during the recession.

To make matters worse, studies show older Americans are clinging to their jobs longer, fearful of losing their steady paycheck. In fact, this year, for the first time ever, a majority of non-retired Americans confessed they were unsure whether they’d have enough money to last through their retirement, according to Gallup. And with good reason.

The Employee Benefit Research Institute recently reported that a typical American couple hoping to retire today would need to have $338,000 stashed away. And that may actually be low-balling it as the study does not factor in long-term care expenses.

So how much more would you need? If you happen to be an eternal bachelor (or bachelorette), the individual breakdown is that men need anywhere from $134,000-$378,000 to have a 90 percent chance of covering their medical expenses, while women may need as much as $450,000. Women require more money mainly because they tend to live longer. This is particularly worrisome given that the majority of children born this year are expected to live past 100. Does this mean our kids will have to work into their eighties to pay for their longer?

One silver lining now is that regardless of gender, it’s possible to survive on less than $100,000 in savings if you’re comfortable with 50-50 odds that the money will run out, depending on how big your health bills are.

So how exactly do you go about saving enough money to last?

Time Magazine recently ran a cover story that employees should be getting pensions instead of 401K plans. It’s a persuasive argument which you can read more about here.

Regardless of the mechanism, it’s crucial that you also have money set aside for your late life health costs. Newsweek recommends using health care savings accounts, which “combine a high-deductible health-insurance plan with a savings/investment account.” This plan lets users put aside more money that won’t get taxed.

—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.

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