| Sargent & Lundy Savings Investment Plan |
| REACHING YOUR RETIREMENT GOAL |
| The following excerpts are from
material provided by Strong Funds. The opinions expressed
may or may not reflect those of the SIP Committee. How Much Will You Need? Financial experts have developed a general rule of thumb to help you make that calculation. By multiplying the amount of income you want at retirement first by 20, and then by 25, you can estimate a range of how much you'll need to retire comfortably. For example: If you want a pre-tax retirement income of $30,000 a year, you need to amass between $600,000 and $750,000. That can seem like an overwhelming number. But you can get there from here - if you begin now and save, save, save instead of spend, spend, spend. Investing More to Reach Your Goal. If you invest $500 a month in a tax-deferred account growing at 8% annually, in 25 years you'll accumulate approximately $475,500. This is a healthy sum of money but it's still short of the $600,000 goal from our previous example. If you increase your savings to $750 a month, your account could grow to more than $713,000. Living well later may mean reduced spending now. The more creative you can be about your spending now, the less spartan you may have to be later. One Couple Had a Trial Run for a Year. Living on the amount of income they estimated they'd have at retirement, they quickly realized they needed to scale back their spending and to save a much larger percentage of their earnings. Postpone Major Expenses. If you can postpone major expenses for another year or two, you can set more aside today. You may be able to wait one more year before you buy a new car or take that two-week vacation to Hawaii. Modify Your Everyday Habits. Saving a dollar here and there might not seem very important on a day-to-day basis, but over time those dollars can really add up. If you saved just $4 each workday - by taking your lunch to work, for example, and invested it in a tax-deferred account - after 25 years you could accumulate close to $100,000, assuming you earned 8%, compounded monthly, and reinvested your dividends and capital gains. Rethink Your Housing Situation. Before you buy a new house and increase your mortgage, consider whether you can make your current home more livable, at least for the time being. Save One Spouse's Earnings. If you belong to one of America's 31 million two-career couples, consider living on one salary and banking the other. It can be an adjustment, but one that can pay big dividends later. Remember, attitude is critical to retirement saving success. The sacrifice you make today could make your retirement years more comfortable. |
This page updated on 6/10/98