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Determining Savings Goals Savings Goal Accounting for inflation and assuming a life expectancy of 85, Bruce needs to have a nest egg of $392,000 by the age of 62 to sustain his retirement lifestyle. If you don't have a master's degree in math, don't worry, you can get this number by using the Retirement Planning Quick Report (more about that in a moment). Next, Bruce now needs to determine if his current course of action puts him on track to get to that retirement asset goal. Currently, Bruce has $32,000 in his tax-qualified plan. Also, he is saving $400 per month and has been averaging a return of 7% per year. Obviously, on his current course, Bruce will come up well short of his retirement asset goal. The good news is that Bruce has several ways to get on track for his retirement goal. Let's take a look at his options and the one he chose. Increase savings: Bruce could have found additional savings on a monthly basis to save for retirement. Unfortunately for Bruce, he was already at the end of his budget by saving $400 per month. Retire later: Bruce could have chosen to retire later than age 62. Bruce was not open to this option. (Can you blame him?) Lowered expectations: Bruce could give up some of his lifestyle expectations during retirement. Instead of going to Hawaii every year, he could go every 10 years instead. Bruce did not choose this option. Increase his investment returns: Bruce has been averaging a return of 7% on his money. He could choose to change his investment strategy and try to increase his return. In fact, this is exactly what Bruce chose to do. He diversified his investments. And by using asset allocation to help reduce the risk on his investments, Bruce's goal is to average a return of 9.5% per year. < PREVIOUS NEXT > #38599