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After working for years, the issue of retirement becomes one of the most important and planning retirement savings is one of the main objectives. The financial services agency Fidelity, after several analyzes, concluded that people who work between 50 and 60 years old must replace at least 55% of their income before retirement to continue maintaining their lifestyle.
For this reason, the company presented a strategy in which it allows the savings of retirees to be 10 times the annual salary for a retirement at 67 years, it is called “Fidelity 45% rule” which consists of establishing that savings for retirement generate about 45% of your income before taxes and retirement each year.
For his part, the benefits obtained by Social Security will be used to cover the rest of the expenses and needs. The agency also explained that because retirees generally don’t continue to contribute to their retirement accounts after retirement, earnings will be lower than people who still have a job, so this rule would be a good option. saving.
The financial services company exemplifies that if a retiree earning $100,000 generally tends to spend between $55,000 a year, but by applying the 45% rule, that same amount you initially earn, by saving enough you could spend close to $45,000 a year and Social Security benefits in both cases would continue to be used to support the lifestyle.
But what about those retirees who had less income? According to Fidelity they will have to replace a larger portion of that income for savings. “Your salary plays an important role in determining what percentage of your income you will need to replace in retirement,” the agency explained.
Similarly, the company warned that “people with higher incomes tend to spend a small part of their income during their working years, and that means a lower income replacement goal in percentage terms to maintain your lifestyle in retirement.” While he pointed out that Social Security doesn’t play as important a role in the retirement savings projections of higher-earning workers.
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