# Saving to Retire

I see too much pessimism on whether it’s possible to achieve a comfortable retirement.

Hence, I highlight three observations on saving for retirement:

• Surveys frequently remind investors that they don’t save enough for retirement.
• Investors are keen to know what it takes financially to achieve a comfortable retirement.
• This is a good time to start the optimistic retirement math discussion.

The number often mentioned is rounding up financial assets of \$1,000,000 by age 65. However, accumulating that sum of money may be a tall order for some.

It can be done, but it is not always easy. So, I propose meeting halfway, say at \$500,000.

Typical sources of income and capital are the registered accounts, saving accounts, stocks and bonds. Perhaps, income real estate, employer pensions and a family business also fit.

Adding regular savings to your investing plan is simply a must to reach retirement goals. Your degree of financial success has a lifetime of implications.

Assume you begin saving at age 30, 40 or 50 and have no other retirement assets. Here are some annual saving targets to reach \$500,000 by age 65 (figures rounded):

Annual Returns to Age 65 Your annual saving targets starting at:
Age 30 Age 40 Age 50
8% \$2,900 \$6,800 \$18,400
7% \$3,600 \$7,900 \$19,900
6% \$4,500 \$9,100 \$21,500
5% \$5,600 \$10,500 \$23,200
4% \$6,800 \$12,000 \$25,000

Say you are age 40, you will need to save \$10,500/year to age 65 with 5% returns. That saving target reduces to \$7,900/year to your age 65 with 7% returns.

If your aim is to accumulate \$250,000, divide the above annual saving targets by two. For the \$1,000,000 goal, multiply the above saving targets by two.

An interesting exercise is your total saving injections, say at the 5% returns. Here is the range of total savings you contribute to achieve \$500,000 by age 65:

Total savings you contribute with 5% returns, by starting at:
Age 30 Age 40 Age 50
\$196,000 \$262,500 \$348,000

You supply far less savings by starting early, say at age 30 vs 50. Ponder these key reflections for your retirement saving journey:

• Stop dwelling on all the pessimistic surveys and take them with a grain of salt.