This article comes exclusively from our friend Jean Chatzky. Jean is an award-winning journalist, a New York Times best-selling author and an in-demand motivational speaker. She is also the financial expert for NBC's Today show. Recently, she has launched Money School, a project devoted to teaching people to take control of their -- one simple, affordable and virtual class at a time.
Here's the conundrum: You'd like to get a grip on your retirement number -- that elusive six- or seven-digit figure that provide enough for you to live comfortably for the rest of your life. The best way to do that (other than hiring a financial advisor to work up scenarios for you) is to sit down and spend some time with an Internet retirement calculator.
And that's something half of all adult Americans have yet to do.
It isn't that the calculators are too difficult (they're not) or expensive (they're free).
It's that you're human. And humans procrastinate.
Now there's another . Actually, two.
Recently, two big players in the financial services industry, Fidelity and benefits consulting firm Hewitt, their minds to giving investors a shortcut. They each released a set of guidelines that lay out how many times your salary you should have saved and by what age.
"We had to change the discussion," Hewitt's Byron Beebe said.
For three decades -- based on in an important government report on pension policy issued in 1981 -- you were thought to have enough to retire if you could replace 85% of your . That was easy enough to figure when you knew how much you'd have coming in from a pension and Social Security. "Today, most people have a lump sum account balance," said Beebe. "If I tell you that you need 85%, how do you know if that's enough?"
Now, you .
It's a little confusing that the numbers from Fidelity and Hewitt look much different. But dig into them and you realize they're actually closer to the same.
First, the scales. Fidelity says that by age 35 you should have an amount saved equal to your annual salary.
By age 45, three times.
By 55, five times.
And by retirement -- at age 67 -- eight times.
Hewitt says that by age 35 you should have 1.75 times your salary saved.
By age 45, four times.
By 55, seven times.
By 60, nine times.
And by retirement -- at age 65 -- 11 times.
The big differences between the numbers?
- Retirement age: Fidelity assumes retirement at 67, while Hewitt assumes 65. If you retire at age 67 on the Hewitt table, the of 11 drops to 9.4 times.
- Unreimbursed healthcare: Hewitt includes it. Fidelity doesn't.
Are the numbers perfect? Of course not. For one thing, they have you shooting for the same goal whether you're a man or a woman, despite the fact that women live an average seven years longer. There are also the growth assumptions. For instance, CDs, that's not going to happen and you'll need to save more.
But what I like about Fidelity's and Hewitt's calculations is that for those of you -- and you know who you are -- who have not been inclined to run a true calculation until now, they give you something to shoot for. And if you know where the finish line is, you're much more likely to get there.