Steps for making sure you have enough money to retire

Many Americans fear they won't have enough money

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DETROIT – It might not be a worry you talk about much, but many Americans are worried they will not have enough money to retire.

Local 4 certified financial planner Rod Meloni said it's never too late to start saving, but don't wait. Plan to spend about 80% of your pre-retirement income to enjoy the same quality of life.

Calculate how much you'll need in savings by subtracting your Social Security and any pensions from your retirement needs.

For example, if you need $75,000 a year and expect $40,000 from Social Security benefits and pensions, that means you'll need to take out $35,000 a year in savings to pay just your living expenses.

Meloni warned not to rely on Social Security.

"Social security was never ever meant to be your sole means of support in retirement," Meloni said.

"When people are going into retirement there are more and more things that they're uncertain about," said Celine Pastore, CRPC, women's wealth advisor. "They're uncertain about their health, uncertain about their income. Are they going to run out of money?"

One in three Americans have $5,000 or less saved up for retirement, according to the Northwestern Mutual’s 2018 Planning and Progress study.

"If you haven't saved for retirement you've got to start because the average person is living until almost 90 now," Meloni said. "The odds of you outliving your money are pretty solid when you've got savings, so if you don't have any savings you really got a problem."

Figure out you how much money you'll need.

Don't forget healthcare issues. The latest projection is that health care expenses after 65 will be $10,000 per year per person.

"Understand Medicaid planning," Pastore said. "More and more people are ending up in nursing homes today."

Meloni's advice is to start saving as much as you can and use a qualified plan like a 401K where money goes in pre-tax.

"When you retire you take the money out, you pay the tax then with the assumption you'll be in the lower tax bracket," Meloni said. "Right now, this year, for the average worker you can take, you can put aside, save $19,000 in your 401K this year."

Meloni recommends putting away anything close to the maximum amount allowed if you can. He said if someone starts when they're young, they get the growth and will be able to take out a large lump sum.

He also said the government allows people at lower income levels to take out both a 401K and an IRA.

"If you're over 50 you can put up to $25,000 in your 401K, and then at a lower income level you can also put in $6,000 in your IRA because you're getting the catch up," Meloni said. "The catch up is $1,000. The regular IRA annual amount you can set aside is $5,000, after age 50 it's $6,000, but if you are in a lower income bracket, if you're single it's between $64,000 to $74,000 is called the phase out, at that income level you can do both an IRA and a 401K. if you're married filing jointly between $103,000 - $123,000, there is a phase out but you can still put that much money away so what you're talking about, what Uncle Sam is offering you the opportunity to do is if you're over 50 and you haven't set aside a lot and you make decent money you can set aside as much as $31,000 a year which is tax deferred which comes right off the bottom line of your taxes now and then it gives you money to take out when you are retired. That's where I'd start, if you can."

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