How much money will you need to retire comfortably?

Most financial planners typically recommend trying to replace about 80% of your pre-retirement income to maintain your current lifestyle. 

That means if you earn $100,000 annually, you’ll need $80,000 every year in “income replacement.”

Of course, we’re all about turning you into a 401k Millionaire, one retirement savings dollar at a time. But if you have doubts about reaching your savings goals, don’t worry – you’re not alone.

According to Financial Finesse, an online financial wellness firm, 42% of survey respondents say they are concerned they will not reach future financial goals, versus 35% in 2012.

The good news? Financial Finesse also says a “greater percentage of employees are taking steps to improve their financial situations on a regular basis”:

        47% have taken a risk tolerance assessment, versus 44% in 2012.

        36% say they rebalance their investment accounts, versus 31% in 2012.

        47% are maximizing all available federal tax credits and deductions, up from 44% in 2012.

Here are a few thoughts on ways you can improve your long-term savings goals, especially with your 401k plan:

Don’t borrow from your 401(k). Sometimes people need cash, and right away. (Think of a major health issue or natural disaster such as a flood or hurricane for which insurance doesn’t cover the loss.) But if you borrow the money from your 401(k) plan and don’t pay the money back right away, you’re taking money away that was compounding annually, putting a major dent in your retirement savings.

Review other options. Maybe you own a money market account? Or a bank savings account that’s not earning much interest? Borrowing cash from either of those poses less risk for your long-term financial health than borrowing from a 401(k).

Upping your regular retirement plan savings. Even adding another $50 per paycheck to what you’re already saving in your 401k  can mean a big difference down the road when you retire. You’ll barely miss the money, especially if you cut back on non-essential spending items such as nights out on the town or an expensive latte every day.

Reallocate your assets. If you ignore fund holdings in your retirement account, you could be weighted on the wrong side of the financial markets and be losing money as a result. Avoid that by working with a trusted financial advisor or talking to your employer’s retirement plan sponsor about a good asset allocation strategy that balances your retirement account properly among solid investment fund categories. It could mean a big difference in your retirement fund’s annual returns, especially if you haven’t been paying close attention.

These aren’t the only steps needed to become a 401k Millionaire, but they are great ones to start adhering to right away.

As always, good luck, and good 401k savings – and I’ll see you next week.