Worried about retirement funds? These three things can help close the gap

The advice about how much to save for retirement is changing. On this week's BETTER Business, Stephanie Ruhle explains how make the math work.
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If you're young and want to retire by 65 — and plan to live off just half of your salary when you stop working — you need to save 40 percent of your income over the next 30 years, according to new research. Getty Images/Hero Images
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By Stephanie Ruhle

This is BETTER Business, a new personal finance segment hosted by Stephanie Ruhle. Each week, Stephanie breaks down the financial headlines and how they'll affect your wallet and shares compelling conversations with industry leaders, entrepreneurs and people who've cracked their own personal money codes.

Are you saving enough for retirement? If you’re already in your 50s or 60s, you may be all set. But for millennials and Generation X this information is crucial, so listen up.

Standard advice is to save 15 percent of your paycheck, but new research from MIT suggests the figure is much much higher, as reported by CNBC Make It.

According to the research, if you want to retire by 65 — and plan to live off just half of your salary when you stop working — you'll need to save 40 percent of your income over the next 30 years.

Why so much? Well, investment returns aren't forecasted be as high as they have been historically.

Your parents may have been lucky to see an average of 10 percent returns for their 401k investments, but realistically you should expect to see 3 percent over the next ten years.

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So let’s say saving half of your paycheck isn’t possible — it really isn’t an option for a lot of people. What can you do? Adjust your future plans. Here are some things to consider:

If you can keep working, you should

Staying in your job longer means you can put off dipping into your retirement savings. Even working part-time after you retire will help cover monthly costs.

Wait to collect social security

Benefits from social security are much greater if you wait until age 70 compared to the age of eligibility at 62. That difference could help you make ends meet.

Invest in your health now — for a better future

Have you been prioritizing the gym — or eating better? How about that yearly physical? Now's the time. One of the biggest costs in retirement is health care costs. Take care of yourself while you’re young, fit and healthy, it’s an investment in a different sense.

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Consider greener pastures

If you're currently in an area with a high-cost of living, your savings will go a lot further if you can move somewhere cheaper. Whether that's downsizing your home or moving to a state with a lower cost of living, it's worthwhile to do the math and keep your options open.

It’s important to start thinking about this stuff now so you can plan ahead and secure a better life in the future.

See the whole BETTER Business show for this week:

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