Photo by aussiegall

A Business Week article by Amy Feldman helps you evaluate your retirement savings.  You can read the original article by clicking here: Sizing Up Your Nest Egg

The article offers data points for your retirement savings, in order for you to gauge if you’re on the right path.  The formula is based on multiples of your current salary..  According to Brett Hammond, TIAA-CREF’s chief investment strategist, you should have saved:

• 2.1 times your salary by age 35;
• 3.6 times your salary by age 45;
• 5.4 times your salary by age 55;
• 7.7 times your salary when you retire at age 65.

There are certain assumptions made, such as a 4% annual salary growth, a 6% return on investments, and a 25-year retirement period to finance.  That would put me at the ripe old age of 90.  I should live so long.  His lips to God’s ears.  So how are we doing based on Hammond’s parameters?

When Hammond looked at the retirement readiness of a sample of TIAA-CREF’s more than 3.2 million participants, he found the vast majority were on track. But their average savings rate of nearly 17%-including both employee contributions and those from their employers-is far higher than that of the typical 401(k) participant, which is in the single digits. Among those participants whose total contributions are less than 10% of their pay, their average assets about equal their salaries-nowhere near enough.

The last sentence should serve as a wake up call to workers who have neglected their retirement planning.  Obviously, we’ve all taken a big hit over the last year to our 401(k)s.  My savings aren’t where I’d like them to be, but I don’t see any buzzards circling.  I still have time to recover.

So, how will I ensure that I have enough?  My first step is to increase my income.  I hope to accomplish this through the development of multiple income streams, so that I’m not reliant on just my salary.  My current avenues of interest are online income generation and dividend-producing stocks.  I may also look into purchasing tax liens.  There’s a good book on the subject called The 16% Solution.  You can buy it by clicking on the following link:

How are you doing with your retirement savings? Do you come close to the parameters set forth in the article, or do you have a ways to go?

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