I’ve made no secret over the years that I’m not a huge fan of the stock market. However, in today’s economic environment, it’s hard to deny that stocks will likely play some role in a retirement plan, and in many cases, an essential role.
While my wife and I don’t have a lot of extra cash to throw at our retirement plans, over the last few years, we haven’t been throwing any at them, so something is better than nothing.
In an attempt to diversify our savings and make something of the whole New Year resolution thing, my wife and I are setting a new retirement goal.
$50 a week is achievable and reasonable
When I add up $50 a week for both my wife and myself over the course of the year, it comes out to $5,200. Trying to make a lump sum payment of that amount seems more insurmountable than just $50 a week. With kids, a home, and all the rest, pulling $5,000 to put toward retirement would pretty much leave us without an emergency fund. But $50 a week sounds a much more reasonable and feasible goal, which is an important aspect of at least getting started contributing to our retirement accounts again.
Retirement account plan expectations
As I mentioned, I don’t have tons of faith in the stock market. Having gone through the tech bubble and financial crisis in the past 15 years, it certainly makes me wary of stocks and the market in general. However, in our current economic environment, there just aren’t many other options offering reasonable rates of return. Plus, having my retirement account in a more stable income fund that pays out monthly dividends that yield in the range of 5 to 6 percent a year adds a bit of confidence.
Even if the stock market doesn’t move an inch over the next three years, if we can at least reap the 5.5 percent reward of those regular dividends being reinvested and compounded annually of the next 30 years, with our continued $100 (combined) weekly contributions, we could be looking at nearly $400,000 by the time we near retirement.
Hopes of a more secure retirement
While $400,000 might not be a life-altering amount, when paired with Social Security benefits, savings, and entering retirement with little or no consumer or mortgage debt, we hope it’s enough to better secure our future. However, CNBC.com reports that the average spent on health-related costs not covered by Medicare is about $135,500 according to 2012 data from the Employee Benefit Research Institute. It also found that Ameriprise noted that experts predict Americans could need $227,000 for health-related costs not covered by Medicare by 2020. Therefore, preparing for retirement in 30 years is far from a set plan, but at least our goal helps us get back on track.
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The author is not a licensed financial professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.