Are You Saving Too Much Money for Retirement?

The conventional wisdom is that you can never save too much for retirement. However, this may not always be the case. While it’s important to have money set aside for your future, there is such a thing as over-saving for retirement.

How Much of Your Current Income Should You Save for Retirement?

Putting away too much of your income for the future can actually be detrimental to your current financial well-being. It’s crucial to find the right savings rate that allows you to live comfortably now while also preparing for the years ahead. Excessively high contributions to your retirement savings can limit your ability to tackle other financial priorities, like paying off debt, investing in your career, or enjoying the present. The key is to save enough to meet your retirement goals without sacrificing your quality of life in the meantime.

So, how much of your current income should you be saving? While the exact amount varies from person to person, it is recommended that you save approximately 15% of your yearly pre-tax income toward your retirement savings.

How Much Should You Have Saved for Retirement?

The amount of money you should have saved for retirement depends on various factors, including your desired lifestyle, anticipated expenses, and the age at which you plan to retire. As a general rule of thumb, it’s recommended that you have saved between 8–10 times your annual pre-retirement income by the time you reach retirement age.

For example, if your annual pre-retirement income before taxes is $60,000, you should aim to have saved between $600,000 to $900,000 by the time you retire. This amount will provide you with enough money to cover your living expenses, healthcare costs, and other retirement-related expenses.

It’s important to note that this is a general guideline, and your specific retirement savings needs may vary depending on your circumstances. Factors such as your expected lifespan, inflation, and the cost of living in your retirement location can all impact the amount you’ll need to save.

Tips on Saving for Retirement

Saving for retirement is a crucial aspect of financial planning that helps ensure you have a comfortable life after you stop working. Here are some effective strategies to help you build a substantial retirement fund:

• Start saving early: the earlier you start saving for your retirement, the longer you will have to build your retirement fund.
• Save regularly: it’s important that you make regular contributions to your retirement fund to ensure you are growing your savings at a steady rate.
• Utilize investment accounts: don’t just save your money, invest it. One popular strategy is to invest in dividend-paying investments which can help you generate more income. 
• Reevaluate your savings plan often: you should revisit your retirement plan regularly to ensure you are still on target to reach your retirement goals. Factors like a wage increase or decrease, inheritances or a significant spending on home maintenance could impact your financial health, and your plan should be adjusted accordingly.

By following these tips, you can create a strong plan that grows over time, helping you achieve financial stability in your retirement years.

Grow Your Retirement Savings with Bloom

Established in 1985, Bloom Investment Counsel, Inc. has offered investment management services to wealthy individuals, family offices. corporations, foundations, institutions and trusts. For almost 25 years, our team at Bloom has specialized in investing in income-generating investments, specifically dividend-paying stocks. In addition to growth from investing in the stock market, dividend-paying stocks can help you generate income, which can be particularly helpful during your retirement years by providing a steady stream of income.

If you are looking for a personal investment management service that can help you generate income, if needed, and growth to build your retirement fund, contact us today. Call us at +1–416–861–9941 or email us at info@bloominvestmentcounsel.com. We would be pleased to work with you and/or your other financial partners to help achieve your retirement planning goals

This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.