Wednesday, October 3, 2007

Retirement day 3

See the post starting two days ago if you have not been following along.

I would like to wrap up my thoughts today on the retirement paper. Overall the paper makes some conservative assumptions (returns of only 6%) and some riskier ones (social security will still be around). The paper does show the dramatic difference in the savings levels needed to maintain lower incomes or single families. The paper also shows the importance of a house. For those of you who make $135,000 combined with your spouse. One final calculation, to reach that $167,000 suggested in the paper, you should start putting away a little over $10,000 of your income each year starting at age 25. If you are willing to live on less (say $70,000) then you can put away only about $1,000 a year then increase your contribution to retirement to 8% when you reach 40.

So the overall recommendation to start putting money in a IRA plan as soon as you can when you are young is a good one.

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