Tracking Retirement Savings: Target Amounts to Achieve by Age 60 and 65
In the final stretch towards retirement, having a well-planned savings strategy is crucial. According to JPMorgan's retirement savings guide, the amount you should have saved by ages 60-65 depends on your income level. This guide offers a personalised approach, emphasising the importance of a "magic number" that ensures a comfortable retirement lifestyle.
For an individual with an income of $100,000 at age 65, the guide suggests having $890,000 saved. Those earning $150,000 should aim for $1.28 million, while those with an income of $200,000 should have $1.64 million saved. The savings target increases to $1.68 million for individuals with an income of $250,000 at age 60, and $2.18 million for those earning $300,000 at the same age.
The guide assumes a 5% annual gross savings rate, a pre-retirement portfolio of 60% equities and 40% bonds, a post-retirement portfolio of 40% stocks and 60% bonds, an inflation rate of 2.4%, a retirement age of 65, and 35 years in retirement.
As you approach retirement, it's essential to consider your Medicare options. Original Medicare has higher out-of-pocket costs and may require a Medigap plan for full coverage. Medicare Advantage, offered by private insurers, can be cheaper but switching plans is only possible during open enrollment. It's worth noting that Medicare kicks in at 65, but should be considered well in advance.
Another factor to consider is the potential impact of a big Roth conversion on Social Security and/or Medicare. Roth conversions don't have to be done all at once and can be spread out over multiple years.
Estate planning is also important in this age range. Between ages 60 and 65, it's recommended to update wills and consider tools for maintaining control of health care decisions. If facing retirement shortfalls or feeling overwhelmed, don't let paralysis set in. Consider working longer, saving more, or working when you retire to boost your savings.
Lastly, it's worth considering if a Roth conversion is right for you in your early 60s. This can provide tax-free gains and allow tax-free withdrawals after five years and age 59-1/2.
JPMorgan's guide provides a valuable tool for determining how much you should save based on your age and income. By following this guide, you can ensure a comfortable retirement lifestyle and peace of mind as you enter this exciting new phase of life.
- To achieve a comfortable retirement lifestyle, it's essential to follow a well-planned savings strategy, as suggested by JPMorgan's retirement savings guide, which offers personalized savings targets based on one's income level.
- As you approach age 60, it's crucial to update your estate planning documents, considering tools for maintaining control of health care decisions, and this is in line with the personal-finance approach advocate by JPMorgan's guide.
