On Money & More – June 2022

There are a lot of free tools out there to help with financial planning. Most real estate websites will have a mortgage calculator. With rising mortgage rates, knowing what is affordable is essential for a prospective homebuyer. Another common tool asks, “Have You Saved Enough for Retirement?” If you’ve ever played around with these online retirement calculators, saving for retirement can be a serious exercise in sticker shock. The good news is a thoughtful financial plan can place you on the right trajectory, eliminate unnecessary worry, and free you to live while your money works behind the scenes. By way of reminder, here are some general guidelines for what you should have stored away and invested at every age:

By age 30: You need the equivalent of your current annual salary saved. For example, if you earn $50,000, you should have $50,000 saved for retirement by the time you’re 30. For those in this age bracket, see if you can save at least 10-15% of your income going forward. The earlier you start saving, the more compounding will help you in later years!

By age 40: You need three times your annual salary saved. Again, if you earn $50,000, this means you should have $150,000 by the time you’re 40. Invest as much as you can by maxing out your 401k and considering an IRA or Roth IRA to supplement. Income limits do apply to a Roth IRA contribution, but retirement accounts have great tax benefits that make them a good place to store long-term wealth.

By age 50: Have six times your annual salary saved. At this age, you can save even more with the 401k “catch up.” Continue to max out your 401k and continue to look at other retirement accounts for additional saving opportunities.

By age 60: Have eight times your annual salary saved. And by age 67, the date frequently targeted for retirement, try to have ten times your annual salary saved. If you are remaining employed, contributions can continue to be made to retirement plans and with earned income, contributions can continue to be made to an IRA or Roth IRA (income limits can impact Roth contributions).

These guidelines can be lofty goals for many of us. After all, savings accounts are just one thing competing for our money—life often gets in the way. But, if you are off-track, don’t delay. Do your best to start saving right away. Every person is unique, however, and your circumstances might be significantly different than the “guidelines” shared here. If you want to talk more about your situation, let’s have a conversation and let’s see what is possible. Find a plan that makes sense for you today, for your best tomorrow.

All opinions and data included in this commentary are as of May 12, 2022 and are subject to change without notice. The opinions and views expressed herein are of Cutler Investment Counsel, LLC and are not intended to be a forecast of future events, a guarantee of future results or individual investment advice. Nothing herein should be construed as tax advice. This article is provided for informational purposes only and should not be considered a recommendation or solicitation to purchase or sell securities. This information should not be used as the sole basis to make any investment decision. The statistics have been obtained from sources believed to be reliable, but the accuracy and completeness of this information cannot be guaranteed. Investing involves risk, including the potential loss of principle. Neither Cutler Investment Counsel, LLC nor its information providers are responsible for any damages or losses arising from any use of this information.