Nearly half of Americans are heading into retirement with little or no savings…

That’s according to a U.S. Government Accountability Office (GAO) survey.

It found that 48% of people over 55 had nothing saved in a 401(k) or an individual retirement account (IRA).

We sincerely hope you’re not one of those people. IRAs and 401(k)s are great tax-deferred ways to build your wealth. If you don’t have one of them, you’ll probably need to rely on the government to take care of you in your golden years.

And that’s not a safe position to be in…

But even people who are saving are far behind the curve. According to another study by the GAO, the median amount of savings for households of people aged 65 to 74 is only about $148,000.

That’s probably not enough to get you through your golden years…

If you were to put those savings in an inflation-protected annuity, you’d receive about $650 per month in retirement. Adding that to the average monthly Social Security payment of about $1,470, you’d have about $2,100 per month in income – around $25,000 annually.

Would that be enough for you to live off of when you’re in the later stage of your life? If not, you need to do some planning.

And that’s what we’ll show you how to do today…

Your “Magic Number”

The first thing you need to do when putting together your retirement is to pick a retirement age.

For simplicity’s sake, if you want a “conventional” retirement, you should aim for age 70. But of course, this age will differ for each individual. Some people want to retire before 70… and others after.

Once you decide when you want to retire, you need to determine how much income you’ll need to live comfortably when you stop working.

At PBRG, we call this your “magic number.”

First, you need to think about your necessities when you’re not working… Will you have rent or mortgage payments? Property taxes? Health care expenses? Car payments? Think about them. Write down how much they’ll cost today.

Then think about the things you’ll want to do… What are your hobbies and interests? Will you travel? How much will those things cost? Write those down, too.

Now add up all those numbers… That’s how much income you’re going to need every year from your savings and investments to live off of.

Once you find out this “magic number,” you can then determine how much you need in your account to retire.

Now, this is only a general rule of thumb… But most conservative portfolios can earn 8% annually over their lifetimes. So divide your magic number by 0.08.

For example, if you think you’ll need $50,000 per year to live comfortably, divide $50,000 by 0.08. That means you’ll need a retirement account of $625,000 – if you want to retire today.

If retirement is further down the road, you’ll have to adjust for inflation. But that gets a little complicated…

Doing these calculations just once won’t cut it. You need to do them every year because the inputs will keep changing.

And we get it… Not everyone has saved enough for retirement. Or maybe you don’t want to retire at all. So what if you still need (or want) to work in your later years?

Here are three simple options you can consider…

Three Other Steps You Can Take

If you plan on working in your golden years, here are three simple suggestions…

  • Work part time.

Just because you’ve passed the official “retirement age” of 62 doesn’t mean you have to stop working. A part-time job can provide you a second stream of income.

And we’re not just talking about becoming a Walmart greeter. (Although that’s a perfectly fine option.) You can also work for yourself – from home…

E-lancing is one idea. It simply means selling some skill you have to people looking for that skill on the internet. These skills can include anything: photography, graphic design, translation, dictation, research, analysis, or writing, just to name a few.

As an e-lancer, you’ll deliver work electronically – meaning you can work your own hours, anywhere you want. So if you have a skill, the market for you to sell it is huge.

  • Use your hobbies to create additional income.

Did you know it’s possible for even amateur photographers to earn $50 to $500 for a single photo taken on a weekend hike? You just need a camera and computer to start your own business.

A blog is another great way to turn your passions or expertise into a reliable income stream. When done right, you can easily earn $5,000 per month or more with zero risk.

And the internet has made it possible for ordinary people to sell thousands of copies of their books online. It takes some knowledge and skill to write and publish a book… But anybody can learn while writing part time in the mornings, evenings, and weekends.

  • Join the peer-to-peer (P2P) economy.

The P2P economy is another opportunity for extra income. P2P is where people buy or sell goods and services directly online with each other.

One example is Airbnb. It’s an online platform allowing people to rent their extra living space to other people short term. You can start bringing in income almost right away.

And think about all the extra stuff in your attic, too… You could auction it off to the highest bidders through an online platform like eBay.

The point is: You can’t trust the government to fund your retirement. You’re on your own. So either make sure you have enough money set aside to fund your retirement… Or consider earning some extra, part-time income.

Palm Beach Research Group