When making your retirement plans, setting a target retirement age gives you an idea of what your Social Security benefits will look like and how much you need to save each month to hit your nest-egg goal. Unfortunately, many people are making a dangerous mistake when setting their retirement age — at least according to finance expert, Suze Orman. Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake.
Here's what it is and 3 simple steps to fix it ASAP Millionaires under 43 hold only 25% of their wealth in stocks. Here's where their money is actually going Orman has long warned that far too many people plan to work into their late 60s, and even into their 70s, despite the fact that doing so may not be realistic. Now, however, Orman believes that employees who plan to work later into their lives may not even have the chance to because of AI.
In a recent post, Orman says she has "always been concerned when people tell [her] their retirement plan is to keep working through their sixties, or to maybe never retire." And now, she says, "AI is making this an even bigger problem by adding a new variable to the mix." Orman warned that AI is disrupting workplaces, and that when AI enters an industry, actual worker exits accelerate. She believes this trend will continue in the coming years and affect every generation, especially those already in their 50s who won't have enough savings to support themselves if their plan was to work well into the 60s and 70s but AI ends up replacing them. Orman's concerns are justified.
For one thing, forced early retirement can be a total disaster. Say, for example, that you're a 50-year-old Gen Xer with $215,600 saved in your 401(k). You're earning $71,000, and plan to work until you're 65.
You'll contribute $7,000 annually to your 401(k) accounts until then and earn an average return of 8%. You're also on track to claim a $2,167 Social Security benefit at 65, which is two years before your full retirement age of 67. At 65, you'd have around $873,875 saved, which would produce about $34,955 in income under the 4% rule.
Your combined income with Social Security would be $60,999. But if you retired at 62, you'd have three fewer years to save, so you'd end up with just $675,681. And if you started Social Security immediately, you'd get hit with more early-filing penalties, bringing your benefit down to $1,750.
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