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That Freakin’ Scary Retirement Estimate

Posted September 22, 2012 by Marcy Twete in Life After Five

Whether you are 22 or 62, retirement is something that should be not just in your mind for the future, but in your mind for today. Smart professionals are pumping their 401Ks and IRAs full of retirement money even when they’re young enough to think, “I barely have money for rent!” Because $100 less in rent today added to your 401K can mean thousands of dollars later. In fact, $10,000 put into a 401K in your 20s could add up to anywhere from $70,000 to $1 million + when you’re 70 (here’s the source for that little tidbit).

If you’re thinking, “I don’t need to worry about retirement yet.” You’re wrong. And if anything is going to scare you into re-budgeting and re-prioritizing your retirement savings, this one line should:

Eleven times your final working salary.

The New York Times calls that “An Estimate Needed for Retirement Savings.” Think that through. Think it through in this order:

  1. What is your yearly salary today?
  2. Multiply that by 11.
  3. What salary do you hope you’ll be making in 10 years?
  4. Multiply that by 11.
  5. Based on your salary in 10 years, what do you hope you’ll be making when you retire?
  6. Multiply that by 11.

Scared yet? If that’s not a wake-up call, I don’t know what is. So do it today. Re-budget. Re-prioritize. And start getting your retirement in order. It’s not just helpful. It’s necessary.

About the Author

Marcy Twete

Marcy Twete is a career fundraiser turned corporate responsibility executive, a career and networking expert and the author of the book "You Know Everybody! A Career Girl’s Guide to Building a Network That Works."