I was talking with Emily's parents about retirement the other day, and it hit me: their generation and ours are living in completely different financial universes. Her mom retired after 38 years as a Florida school teacher. Her dad put in 30+ years at the power company. They're both fully pensioned with a fixed income that's about 85-90% of what they made while working.
For those who don't live and breathe financial terms like I do, a pension is basically a guaranteed paycheck for life after you retire. You don't contribute to it directly, your employer does. It's calculated based on how long you worked there and what your salary was. You work for decades, then you get paid nearly your full salary until you die. Simple. Beautiful. Mostly extinct.
Here's the uncomfortable truth: If you're Gen. X (like me), Millennial (like Emily), or younger, there's a good chance you're headed for a retirement crisis if you're not actively planning for it now. The statistics show that somewhere north of half of Boomers have access to defined retirement plans like pensions. For our generations? Those numbers fall off a cliff.
And Social Security? I wouldn't bet my golden years on it being enough.
Money Matters: The Million Dollar Reality
Let me be painfully clear: to retire comfortably and maintain a lifestyle where you make around $65,000-$70,000 a year in retirement, you probably need north of a million dollars saved.
Let's run through a real example:
Say you want to retire at 65 and generate $65,000 per year in income. If you live until 100 (which is increasingly common), that's 35 years of retirement. Assuming your nest egg generates a normalized market return of 6% per year, how much would you need?
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