Suze Orman

As any Suze Orman fan will tell you, it’s well documented that the majority of Americans don’t save enough for retirement.

I won’t repeat the litany of stats here. It’s depressing enough.

But I will suggest that there is something you can do now, today, to make a difference in your retirement.

You can save money. And you can make a real plan.

Orman, the financial guru and bestselling author, recently said in a podcast that people should aim for $5 million in their retirement fund if they expect to retire early.

Maybe more, even $10 million. I know, that’s crazy. But let’s take her argument at face value.

What Orman is saying, really, is that the future is unknown. None of us knows how long we will live.

None of us knows what the economy of the future will bring, what challenges we might face.

We don’t know how long we might be able to work and produce an income or under what circumstances we might leave work.

Yet, as I explain in this week’s MarketWatch column, things are more manageable that you might think.

Here’s what you can know now, today: Your Social Security income projection and the gap you will need to meet your cost of living in retirement.

Those are two very knowable numbers. You can look up your Social Security estimated income statement online. This is your personal estimate based on your income record over the decades.

Let’s say you do that and find that, as part of a dual-income couple, you will get $26,000 a year from Social Security starting at 65 or 67, whatever your full retirement age might be.

A solid budget

What you have to remember is that Social Security has been a remarkably reliable and efficient system.

It is paid out like clockwork to millions and adjusts for inflation every year.

If you have a solid budget already, go ahead and subtract your cost of living from your Social Security number and there you have it — the gap you have to close, either by saving and investing, by working, or by cutting costs.

If you need another $10,000 to get by in your neck of the woods, that means you need about $250,000 in investments to generate that income, maybe $300,000 if you invest conservatively.

The thing is, if you’re in your late 40s you don’t need $300,000 in hand today to retire on time. You need about $75,000 in a 401(k) or IRA, prudently invested and compounding.

Read more at MarketWatch…

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