Are Your Retirement Savings Really on Track?

Regularly reviewing and adjusting your plan can enhance your confidence.

Retirement planning is a crucial aspect of personal finance, yet many individuals wonder whether they are saving enough. With rising living costs, increasing healthcare expenses, and the uncertainty of Social Security benefits, it’s essential to evaluate your retirement savings and make necessary adjustments to stay on track.

Assessing Your Current Savings

The first step in evaluating your retirement preparedness is to assess your current savings. Review your retirement accounts, including 401(k)s, IRAs, and other investment portfolios. Financial advisors recommend tracking your savings rate as a percentage of your income. Experts suggest saving between 15% and 20% of your annual income, including employer contributions.

A helpful benchmark is the retirement savings multiple rule:

• By age 30: 1x your annual salary
• By age 40: 3x your annual salary
• By age 50: 6x your annual salary
• By age 67: 10x your annual salary

However, these figures vary based on lifestyle expectations and healthcare costs.

Projecting Future Needs

To determine whether your savings are sufficient, estimate the income you’ll need in retirement.

The 4% withdrawal rule suggests withdrawing 4% of your retirement savings annually to sustain a 30-year retirement. For instance, if you require $50,000 annually, you’ll need approximately $1.25 million in savings.

When planning, consider factors like housing, healthcare, travel, and inflation. Online retirement calculators and financial advisors can help refine projections and set realistic savings goals.

Adjustments to Stay on Track

If you find yourself behind on savings, consider these strategies:

• Increase Contributions: Maximize tax-advantaged contributions to 401(k)s and IRAs.
• Delay Retirement: Extending your working years allows your savings to grow while reducing the years they must support.
• Adjust Investment Strategy: Diversify your portfolio to balance risk and return.
• Reduce Expenses: Cutting discretionary spending frees up funds for savings.

A financial advisor can provide personalized insights to keep you on track. Contact the Retirement Center at Popular by writing to educacionretiro@popular.com or complete the form and one of our representatives will assist you. Regularly reviewing and adjusting your plan can enhance confidence in your financial future.

The information and general descriptions found in this material are designed to help you understand some of the factors you should generally consider when evaluating the appropriateness of any strategy or investments within your retirement plan. Any description included is for informational and educational purposes and for your independent consideration only; it should not be regarded or viewed as advice or as a recommendation to take (or refrain from taking) any particular action. By providing this information, we assume that you can evaluate the information and general descriptions found here to exercise your independent judgment. Banco Popular de Puerto Rico, its subsidiaries and/or affiliates are not engaged in rendering legal, accounting or tax advice services. If legal, accounting, or tax advice services are required, you should seek the services of a competent professional.  Investment products available through a retirement plan are not insured by the FDIC, they are not deposits or obligations of, nor are they guaranteed by Banco Popular de Puerto Rico, its affiliates and/or subsidiaries; and may lose value, including the possible loss of the principal invested.

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