In many cities in America, it has become extremely difficult for one to retire with no plan. Some people have run so far behind that they give up on the prospect of retirement and they work until their body gives out or cannot fulfill job duties. In this blog post, I will consider the many facets of retiring in America, using the amount of $1 million as a point of reference.
If you were to start saving $400 every month from age 25 till age 67, you would have $1,000,000 but it’s important to remember what city you are in. In Northern California you would be lucky to make it over 15 years with a million dollars but if you were to live in Tennessee that expectancy doubles.
You must also consider how much money you would be getting from social security. The average amount is around $1,661 a month which is about $20k a year. So the majority of the money you will need will have to be found on your own. The unfortunate reality is that my generation has been made well aware of the fact that this extra source of income might not be around by the time I retire, but not all hope is lost.
The money that you end up investing will be taxed unless you choose two popular routes: Roth IRA or Roth 401k. The good thing about these investment funds made in “after-tax” dollars which essentially means that this money or the majority of it will not be taxed once you turn 59.5 years old.
The mistake some make is having to pull out some of the automatic contributions made by their employer in their Roth 401k to pay for bills or other emergency costs. When this happens the money they take out is taxed and this can have a bad effect on your savings plan if it is not monitored.
At this point, I think we are all well aware of the stresses our healthcare system has on societies elderly. These are unfortunately things that can only be planned for as no one can be prepared for how many medical fees can cost. Maryalene LaPonsie from US News states that the average elderly couple in America could spend around $300,000 in medical costs in retirement. It is advised that you consult your doctor about your families health history and what to expect to best prepare.