The Wall Street Journal reported earlier this month that in order to live comfortably in retirement, you will need anywhere from 70% to 100% of your preretirement income. To help you calculate this, the Journal referred to the Cori Index. This index will help those who are between ages 55 and 64 calculate how much money they must have at age 65 to fund their retirement.
For example, at age 55, the index is $12.82 meaning that for every dollar of retirement income, you will need to have accumulated $12.82. If your goal is $80,000 of income starting at 65, you will need your retirement fund (IRA, 401k, investments, etc.) to have $1,025,600. If you are already age 60, this jumps to a Cori index of $16.05, requiring $1,284,000. These numbers do factor in an inflation rate of 2.5% per year, but the question is, can you achieve these numbers?
But this is not all you need to plan for. An average American couple retiring at age 65 today would need a present value lump sum of $293,000 to cover future health insurance premiums and out-of-pocket medical expenses over the remainder of their lives, i.e., expenses not paid by Medicare (source: Society of Actuaries).
$293,000? Most people do not have this amount set aside to live on in retirement let alone pay for unreimbursed medical expenses. If you are already age 55+ and have not started your planning, it may be difficult to achieve these goals, but if you are younger with more time for your planning and investments to work, these goals should be readily achievable. In either situation, reach out to your agent or planner to help guide you through the proper decisions for your personal goals.