MINNEAPOLIS (WCCO) — Most people need more than $1 million saved up for retirement, while the average American only has about one-tenth of that in savings, according to Hamline University finance professor Dan Lehmann.
He urges people start saving immediately after entering the workforce — no excuses, not even student loan debt.
“All experts will tell them—sorry,” said Lehmann. “You [have to] pay off the debt in addition to saving for retirement, because you need to start early to accumulate the kinds of funds you need for retirement in today’s world.”
Lehmann urges people consider the following short-term goals:
- Have one year’s-worth of annual income saved by age 30.
- Stay on track to have four to six times your annual income by midcareer.
- Have eight to 10 times annual income by age 50.
People who save less might have to take a pay cut upon retirement, which might be OK — or not.
“And the reason that might not be the case is people who are in their 60s and 70s still want to be very active, and often they want to travel, visit grandkids, or get engaged in new things,” said Lehmann. “Which may not let them reduce their standard of living quite that much.”