How to Go About Age Appropriate Investing

by Andrew McGuinness  //  jul. 27, 2018

I’m sure once you’ve reached your 40’s you will have or have already started wondering whether or not you have invested enough money for your future, post-career. Retirement is always scary to think about, especially when you’re faced with the thought that you might not have saved as much as your peers and will have a hard time getting by when the time does come to stop working. In order to put your mind at ease, here is a guide to how much you should be investing in your retirement according to which stage of life you are in.

1. Retirement overview

A retired person receives an estimated 80% of their original wage upon retiring. Sometimes this is a liveable wage, other times this is not. If your current wage is barely sustaining you now, retiring with 20% less annual income and no other investments or savings to fall back on, you need to reconsider your retirement plans immediately.

The truth is, from the very moment you begin working and earning your own money, you should be cutting costs and saving as little or as much as possible for retirement. Another thing to keep in consideration, however, is the fact that it’s never too late.

Despite the fact you might be in your 40’s and feel as though it’s too late to start saving, you’re wrong. If you give up on saving for your retirement because you feel like you’re past the point where it would have been worthwhile, you are making a big mistake. It’s never too late to save up and invest, and even if you have reached a later stage in life and retirement is nearing more quickly than you might feel prepared for, it’s better to save late than never.

2. 4% Plan

One of the many plans in order to guarantee you will save enough for retirement is the 4% plan. Using the 4% plan requires you to divide the annual income you would like to receive during retirement by 4%. This should be invested in a retirement fund in order to grow enough by the time your retiring days start nearing.

3. Age and salary

In order to keep track of where you should be according to age, there is a list of what percentage of your salary you should have saved according to how old you are. At the age of 25 this is 15%, half of which is advised to be invested in stocks. At the age of 30, this percentage rises drastically, hitting 50% of your salary that should be saved and invested for retirement.

As you near the point in your life when retiring becomes a greater focus and your main concern, the amount of your salary saved in order to retire inevitably grows to an exponential extent. At the age of 40 your funds should be at 200% your annual salary, at 50 it becomes 400%, 60 is 600%, and 67 hits 800% of your annual salary saved for retirement.

4. What should be doable?

According to the Bureau of Labour Statistics, when leading a reasonable lifestyle consisting of basic necessities and the occasional large expenditure, the average working class person should be able to save an approximate 8-27% of their wage before taxes. This ranges, of course, according to age. 8%, for example, is the amount that 60-67-year-olds are able to save from their wages, while from 45-54 workers are able to save the highest percentage, on average amounting to 27%.





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