Ways To Catch Up On Your Retirement Savings
At age 60, you may find that youâre a bit shy of your retirement savings target. The good news is that there are ways to catch up. For 2021, if youâre 50 or older, youâre allowed to make up to $6,500 in extra 401 contributions and $1,000 in additional IRA contributions. Or, depending on your financial situation, you may choose to work a bit longer until you hit your target goal.
What does the average 60-year-old have saved for retirement? A better question may be, how much do you need to save to support your unique vision for retirement? An experienced financial advisor can help you create both short- and long-term plans for achieving that goal.
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Convert To A Roth Ira
Another strategy for wealthy savers looking to avoid drawing down required distributions is to roll over some of their savings into a Roth IRA. Unlike a traditional IRA or Roth 401, which require RMDs, a Roth IRA doesnt require any distributions at all. That means the money can stayand grow tax-freein the Roth IRA for as long as you want, or it can be left to heirs.
Contributing to a Roth IRA wont lower your taxable income, but you dont have to pay taxes on withdrawals from earnings if you are over 59½ and you have had the account open for five years or more. Investors who have a mix of money in a Roth IRA and traditional retirement savings accounts can manage their taxes more effectively.
Be aware, though, that moving pre-tax money from a retirement account into a Roth IRA means you have to pay taxes all at once on those funds. Roth conversions can be expensive, whether youre moving money from a 401 or a traditional IRA. Investigate your options in detail with your tax advisor.
For most retirement savers, paying taxes on distributions is a necessary evil because they need the money, but affluent retirees with a sizable nest egg may want to hold off if they can find a way to avoid taking them.
Average Retirement Income From Pensions
The Pension Rights Center reports that one out of three older adults have retirement income from a pension. This number is trending further downward. Consider yourself extremely lucky if you have this income!
Very lucky in fact: Older adults who have pensions typically have at least twice the income of those living only on Social Security
The median annual pension benefit ranges between $9,262 for private pensions to $22,172 for a state or local pension, and $30,061 for a federal government pension and $24,592 for a railroad pension.
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What Is The Retirement Age In Pa For State Employees
Pennsylvanias statewide State Employees Retirement System, or SERS, is one of the oldest and largest retirement plans for state employees in the country. When the state first hires an employee or when they get close to retirement age, they have lots of decisions to make about their retirement benefits, including at what age they wish to retire.
The SERS normal retirement age is 65, 60, 55 or 50 years of age, depending on what class of service you were in. A SERS employees class of service is determined by when they became a member and the type of work that they did. The annual pension for SERS members is calculated with a formula that includes a few variables about your service as a state employee, including:
- Class of service
- Final average salary
Average Retirement Income 2021 By Household Age
When you look at the U.S. Censuss population tables, one thing that stands out is just how much retirement income drops as a households population changes. The most-recent provided numbers are for 2019, but youll recall the overall median income for senior citizens is $47,357, with a mean income of $73,288.
Unfortunately for older retirees, the table shows that the high end of those averages is set by those between the ages of 65 and 74. Heres how the average retirement income in US breaks down:
| Age Range |
|---|
| $58,684 |
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How Much Savings Do Retirees Have
Despite increases to retirement savings contributions, most households do not have sufficient retirement savings. According to the National Institute on Retirement Security, based on 401 and IRA account balances, 92 percent of working households fall short of retirement savings targets for their age and income.
401 accounts are the most common retirement savings account that the majority of retirees rely on for retirement income. Below is a table breaking down the average 401 account balance by age group in 2019.
| Age Group |
| $195,500 |
Where Does Retirement Income Come From
Many people have various sources of retirement income. These can include investment accounts to protect against inflation, benefits from government programs or continuing paychecks. Generally speaking, its best to have several of these income sources to ensure you have enough to live comfortably.
When considering where your retirement income will come from, one important aspect to think about is the diversification of your portfolio. This can help to alleviate risks in the market and protect your future or current income.
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Withdrawal Strategies For Retirement Income
Being strategic about the way you withdraw retirement funds can protect your hard-earned savings. Without a solid plan, you may spend too much at the start of your retirement and not have enough money to support your lifestyle as you age. Here are a few different withdrawal strategies you can use to ensure this doesnt happen:
Understanding Mean And Median
When youre looking at income averages for any population, youll see the number expressed in two terms: mean and median. A mean number is the result of adding a group of values together and dividing the total by the number of values. Median values come if you group a list of numbers together. The one in the middle is the median. So the answer to what is a good monthly retirement income isnt as cut and dried as it seems.
One example of that is how the numbers change when additional filters are added to it. If you look at the average retirement income by ZIP code, you may find that your income falls in line with the lower or high income levels in your area. Compare that to the typical income for your age bracket and youll get a more accurate picture of where you stand.
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Average Social Security Benefits
In 2019, the average retiree received an estimated $18,034 a year in Social Security benefits. Couples in which both parties received benefits received $30,991 a year. The average for an aged widow or widower was $17,072.
|
|
|
Measures of Social Security benefits |
|
|
Average benefits for retired workers |
$18,034 |
|
Average benefits received by a couple, both of whom were receiving benefits |
$30,991 |
|
$17,072 |
What Do Stay At Home Moms Do For Retirement
Simply put, a spousal IRA enables a stay-at-home husband or wife to set up a retirement account in their own name. As long as one person in your household brings home a paycheck and you file a joint tax return, youre good to go! When setting up a spousal IRA, you have a choice between a traditional and a Roth IRA.
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How Much Does The Average 60
If youâre approaching the age of 60, you likely have retirement on your mind. Have you saved enough? Just how much does the average 60-year-old have in retirement savings? According to Federal Reserve data, for 55- to 64-year-olds, that number is little more than $408,000.
However, this benchmark is merely an average. The amount of savings youâll actually need to retire comfortably will depend on your expenses, your lifestyle and your individual financial goals. Letâs dig into how taking a big-picture approach to your retirement can help you determine a savings target that works for you.
What Is The Average Retirement Income
Wondering how your retirement savings stack up to other Americans nest eggs? Or whether your income in your post-work years will be enough to keep you afloat? Its normal to be curious about the average retirement income in the U.S. Just remember that you need enough in your retiree days to meet your own needs, not to keep up with the Joneses. A financial advisor can help you create a financial plan to reach your retirement goals.
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What Is The Average Retirement Income In The United States
The average retirement age in the United States is 63 years old, but that does not necessarily mean that everyone is retiring with a sufficient amount of income. The ideal retirement program starts the moment a person starts working and grows throughout their working life. But many people either avoid retirement planning until later in their lives, or they neglect to plan at all and rely on the social security program. Considering all of the retirement incomes that are in effect, it is surprising to find out what the average income is for all retired Americans.
Recent Retirement Trends
In recent years, it is estimated that more people are taking retirement planning seriously and are putting aside more money for their golden years. From 2013 to 2017, the percentage of retired people who will be able to afford the basic necessities of life jumped from 38 to 45 percent. It is encouraging that nearly half of the population will be able to successfully retire, but the fact that the other half is ill-prepared is a concern.
Not Taking Advantage Of Social Security
The Average Retirement Income In The United States
The average retirement income in the United States for people age 65 and old is $31,742.00 per year. While this number is in line with the average income for working Americans, nearly 30 percent of all retirees still count on their savings to be able to pay their bills.
Challenges To Retirement
How Do You Set A Retirement Budget
The actual amount of income youll need depends on your standard of living, or the degree of wealth and comfort available to you. You may be able to get by on a good deal less than 80% of your pre-retirement income if you can survive without a car and you dont dine out often or pursue expensive hobbies. You may need to replace more if you want to travel, contribute to charity, or gift money to children or grandchildren.
A standard rule of thumb is to use the 80% point as a guide, then factor in income, lifestyle, and health expectations to modify your budget. You can estimate your costs using a retirement planning spreadsheet.
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Donate Distributions To A Qualified Charity
Some savers, particularly wealthy ones, would rather see their money go to a good cause than give some of it to the government. Traditional IRA account holders can donate their RMD to a qualified charity. This is known as the qualified charitable distribution rule. It does not apply to a 401.
In 2021 and 2022, if the contribution is $100,000 or lessand is rolled out of the IRA and directly to the charityyou wont have to pay taxes on the RMD. In order to get the tax break, the charity has to be deemed qualified by the IRS. This is a good way to save on paying taxes, as you donate to a charity that would otherwise have gotten a donation from your regular savings. You may even feel you can give a bit more if you do it this way.
Required minimum distributions that you donate to a worthy cause or group cannot be deducted from your taxes as a charitable contribution you cant have the tax break both ways.
Here’s Every State’s Average Social Security Check For 2020
Retirees on Social Security need to use strategies to maximize their benefits because the typical payments can be pretty small.
The program’s annual cost-of-living raise is on the teensy side for 2020 just 1.6% and it will leave seniors with an average benefit of $1,503 per month, or $18,036 for the full year.
But there can be big differences in Social Security from one state to another.
Here, we lay out the average Social Security payouts for all 50 states and the District of Columbia in 2020.
Our methodology: We took Social Security’s most current data on monthly benefits and retired workers per state to determine the average monthly benefit for a retired worker in each state during 2018. To those results, we added 2.8%, representing Social Security’s cost-of-living increase for 2019. Then, to those results, we added 1.6% the cost-of-living increase for 2020 to determine the average benefit for a retired worker in each state during 2020.
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How Can A Reverse Mortgage Increase My Retirement Income
A reverse mortgage loan allows eligible homeowners age 62 or older to tap into their home equity, thereby converting the wealth accumulated in their home into usable cash. Borrowers are not required to give up ownership of their property and they may use the loan proceeds in a variety of ways, such as improving the home, paying for medical bills, covering the basic cost of living, and enjoying The GoodLife® in Retirement.
The amount of proceeds you may qualify for depends on a variety of factors, but you can use our reverse mortgage calculator to estimate how much you may be able to get. For further clarification on how reverse mortgages work, contact a GoodLife® Reverse Mortgage Specialist.
Our experts can take a look at how your finances compare to the average retirement savings, discuss your eligibility for a reverse mortgage loan, and help determine the best options to meet your retirement goals.
How Much Do You Need To Retire Comfortably In Each State
Unfortunately, theres no one answer to how much you will need to retire comfortably, no matter what state you live in. But there are a few factors to consider, and there are a few common methods to help you determine what you might need to support your desired retirement lifestyle.
One thing to consider when determining how much youll need to retire is your states tax burden. We covered this a little earlier, but there are several types of taxation that vary by state and that could really impact your ability to sustain your desired lifestyle. Some of these include property tax, income tax, and inheritance tax. For example, if an expected inheritance is part of your retirement plan, then you should know if your state has estate or inheritance taxes.
So a good way to get a personalized plan is to use a tool like Personal Capitals free Retirement Planner. The Retirement Planner will allow you to input specific information thats personal to you and will run thousands of simulations to give you a percent chance of retirement success based on your current portfolio. Get access to the Retirement Planner by signing up for Personal Capitals free financial tools.
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Social Security Pensions And Other Reliable Income Sources
The good news is that, if you’re like most people, you’ll get some help from sources other than your savings. For example, Social Security replaces about 40% of the average American’s pre-retirement income all by itself. The percentage is typically lower than this for higher-income retirees, but, for most people, Social Security is a significant income source.
If you aren’t sure how much you can expect, check your latest Social Security statement, or create a my Social Security account to get a good estimate based on your work history.
If you have any pensions from current or former jobs, be sure to take those into consideration in this step. The same goes for any other predictable and permanent sources of income — for example, if you bought an annuity that kicks in after you retire.
Continuing our example of a couple that needs $8,000 in monthly income to retire, let’s say each spouse is expecting $1,500 per month from Social Security and that one spouse also has a $1,000 monthly pension. This means that, of the $8,000 in monthly income needs, $4,000 is being taken care of by sources other than savings.
So, in summary, you can estimate the monthly retirement income you need to generate using this formula:
Monthly income required = Estimated monthly retirement expenses-Monthly retirement income from other sources
