Do you have enough to retire?

Some of us work to leave a legacy, some just want a simple life. Do you know if you have enough to retire? Have you been scared by insurance agents masquerading as financial planners whose sole aim is to sell you ILP which pays them the highest? Then think again. Think out of the box. I say ditch those financial agents and understand things for yourself.

There are tonnes of information and calculators out there which can help you.

a. the AARP calculator, 
b. the MarketWatch calculator, and the 
c. “Ballpark Estimate” calculator 

My own understanding is the 4% withdrawal rule and the passive income concept. 

This article appears on Marketwatch, 28th Sept 2014.

There are 5 rules of thumb.

• Make it your goal to have 15.7 times your annual pay. This comes to us courtesy of Hewitt Associates. Since Social Security will provide 4.7 times your pay, you need to save 11 times your annual pay in an IRA, 401(k), or other retirement vehicles. (See also 5 checkpoints on your race to retirement.)
• Calculate whether you're on track for your current age. This comes to us courtesy of Fidelity. They suggest that you have 8 times your ending salary by age 67 to meet your basic income needs in retirement. To accomplish this goal you should have one times your salary at 35, two times your salary at 40, three times your salary at 45, four times your salary at 50, five times your salary at 55, six times your salary at 60, and 7 times your salary at 65. (See: Retirement savings: How much is enough?)
• Use a safe savings rate to ensure income adequacy. This comes to us courtesy of fellow RetireMentor Wade Pfau, who suggests a safe level of savings of a little over 16% of salary a year might be a reasonable target. The good news is employer matching and nonelective contributions count toward the 16% rule of thumb. The bad news is people need to start early in their careers; otherwise the amount they need to save increases.
• Make it your goal to save 11%-15% of pay- According to the Principal Financial Group, maintaining a similar standard of living during retirement requires an estimated annual savings rate of 11% to 15% of income over the course of your working career. Once again, it is fair to count the employer match or other employer contributions. Principal cautions, however, that merely maxing out the company match will typically leave you short of this goal. One other caveat: High-income earners may need to save at higher rates, since a lower percentage of their income will be replaced by Social Security.
• Catch up after a late start. The Boston College Center for Retirement Research found that if an individual begins saving for retirement at age 35 and does so for 30 years until retirement, the average household needs to have an annual savings rate of 14% of pretax income to maintain the standard of living they had before retirement. For low-income households it is 11%, for middle-income households ($41, 501 to $76,500) it is 15%, and for high-income households it is 16%.

Are you more confused?! Good!