Midlife Check

Money Magazine (Mar '08) has an article titled "The Midlife Money Checkup". They have comprised a simple formula to see if you're savings are on track.

There is a factor by age group that is multiplied by your current income. This gives how much you should have saved by now.

If you are 45, the factor is 4.1. For 50 it is 6.1, for 55 it is 8.5, and for 60 it is 11.4.

So if you are 50 or near 50 and you make $55,000 a year, your savings should be $335,500. If you make $95,000 a year, are your savings at the level of $579,500?

This is meant as a gauge to see if you are keeping up or falling behind. The small print reads "Assumes 80% pre-retirement income replacement, including full Social Security; no pension; 4% annual real rate of return; 4% inflation-adjusted distribution rate; and 30-year life expectancy in retirement."

'til later