ADDENDUM
Longevity Risk and How Much You Need to Retire
T
his book has focused on how you save: what savings ap- proach can deliver the greatest success in growing your money and delivering valuable benefits. There’s an equally important question that often gets over- looked, and that’s how much you should save. Because the best sav- ings strategy in the world won’t matter if you’re not, you know, actually saving and saving enough. In previous chapters, we’ve discussed the common advice to save around 10 percent of your income for retirement. How do you know if that will be enough? It’s one of the most common questions I hear, and one that doesn’t have an easy answer. After all, there are many unknowns: When will you retire? How long will you live? How will the market perform during your savings years? How will it perform during your retirement years? What will be the rate of inflation? The list goes on and on. You can’t know if you’re on the right track if you don’t know where your track is going. So let’s take a few moments to consider how long you might live in retirement, and how much you need to save to fund it.
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