Unfortunately, people aren't prepared for their future retirement. "People don't put enough money away and they don't do the math right. They don't recognize what it is they need to live comfortably in retirement," Hennessey explains.
So how much money do you put aside and how long will it last? If you set aside $500,000 you will only get a return of $22,380 a year. $1 million will give you $44,761 per year. And finally $1.5 million will leave you with $67,151 a year.
The return numbers seem small because people are living longer. "It's a great thing, but in the old days you could retire at 65 and maybe live to your mid 70's. You didn't need that much," says Hennessey. These days people are taking better care of themselves and there is better medical care.
The biggest problem with retirement savings is people aren't saving soon enough. "The number one thing you can do about these numbers is to start putting more money away," Hennessey explains. "But it's tough, I understand, people have expenses now. But they are going to have expenses later."
How do you get your calculation for the amount of money you should set aside to live comfortably in retirement? "What you have to do, is to say to yourself , how much money do I expect to be making off this money," says Hennessey. "And you have to figure out how long you are going to live."
"People need to stop thinking in terms of how much they have put aside," Hennessey adds, "but how they want to live once they've retired."
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by Jenn Eaker