How Boomers Can Take the Guesswork Out of Retirement Planning To Know They Have Enough Saved
According to a new Vanguard consumer survey, many Americans are unsure about how much they should save or where to start.
While the survey focuses on summer savings habits, such as building up emergency funds and reducing idle cash, it also highlights a deeper issue: Widespread uncertainty surrounding financial planning.
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This includes older Americans, such as baby boomers, many of whom are navigating short-term needs as they approach retirement age. Here’s how boomers can take the guesswork out of retirement planning to know they have enough saved.
Nearly a third (28%) of all respondents listed “not knowing where to start” as a chief reason for not saving more. However, guessing based on past income or general rules of thumb won’t cut it, especially with inflation, rising healthcare costs and longer lifespans.
Individuals can use retirement calculators from trusted financial institutions such as Vanguard or Fidelity to estimate how much they’ll need to save. These tools typically factor in a person’s age, expected expenses, desired retirement age and current savings to assess whether they are on track for a successful retirement.
For those seeking a more tailored approach, working with a fee-only financial advisor can provide deeper insight. Advisors often use Monte Carlo simulations, a method that models thousands of potential financial scenarios, to help clients understand their likelihood of meeting retirement goals.
Even using a general benchmark, such as aiming to replace 80% of pre-retirement income, can offer more clarity than relying on guesswork.
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Not having a savings plan is comparable to driving without a map — forward motion may still occur, but the destination is uncertain.
A strong financial plan extends beyond retirement, encompassing near-term objectives, emergency reserves and timelines for various investments.
To reduce uncertainty, many financial experts recommend starting with the 50/30/20 framework, which involves allocating 50% of your income to essential needs, 30% to discretionary spending and 20% to savings and debt repayment.
That final 20% can then be divided further to cover an emergency fund, retirement contributions and short-term financial goals such as travel or medical expenses. Budgeting tools like YNAB (You Need a Budget) or PocketGuard can help automate this process and provide real-time visibility into spending habits.
