Your Retirement Hopes Filled With Holes

Your Retirement Hopes Filled With Holes?
If youre like many Americans, you may expect to​ enjoy a​ comfortable retirement, but you probably havent taken the actions needed to​ turn those hopes into reality.
The latest survey showed many Americans retirement expectations are like a​ piece of​ Swiss cheesefull of​ holes. For example, many have accumulated only modest retirement savings, underestimating the share of​ their preretirement income they are likely to​ need in​ retirement, and have made no estimate of​ how much they will need to​ live comfortably once they retire.
The Retirement Confidence Survey RCS, be​gun​ in​ 1991, is​ the countrys most established and comprehensive study of​ the attitudes and behavior of​ American workers and retirees toward all aspects of​ saving, retirement planning and longterm financial security. The survey is​ sponsored by the Employee Benefit Research Institute and Matthew Greenwald & Associates.
Here are some of​ the survey results
• Saving More than twothirds 68 percent of​ current workers say they and their spouses have accumulated less than $50,000 in​ retirement savings.
• Health care costs Nearly six in​ 10 58 percent of​ current workers say they and their spouses do not expect to​ receive any health insurance from their employers when they retire. Recent EBRI research showed that individuals age 55 who live to​ age 90 would need to​ have accumulated $210,000 by age 65 to​ pay for insurance to​ supplement Medicare and outofpocket medical expenses in​ retirementfar more than all but 10 percent of​ workers currently have saved for all retirement expenses.
• Longevity Twothirds 66 percent of​ current workers think they have some chance that they will live until age 90or spend 25 years in​ retirement, assuming they retire at​ age 65. These findings suggest many workers may not be planning and saving enough to​ finance the full amount of​ time they expect to​ spend in​ retirement, thereby increasing the odds that they will outlive their retirement savings.
• Income replacement Fourteen percent of​ current workers said they thought they would need less then 50 percent of​ their preretirement income to​ live comfortably in​ retirement. Another 36 percent expected to​ need 50 to​ 70 percent. However, 62 percent of​ current retirees say their income is​ 70 percent or​ more of​ their preretirement income.
• Planning Nearly six in​ 10 current workers 59 percent said they hope to​ have a​ retirement standard of​ living equal to​ or​ higher than their working years. But when current workers were asked if​ they or​ their spouse have calculated how much money they will need to​ retire comfortably, nearly six in​ 10 58 percent said no.
Recent research has found that when a​ traditional pension is​ frozen, many workers in​ the pension are unlikely to​ get an equal benefit value contributed to​ their 401k plan, said Jack VanDerhei, a​ Temple University professor, EBRI fellow, and coauthor of​ the Retirement Confidence Survey. Each case is​ different, but its clear that people currently working should factor into their retirement planning the longterm trend away from traditional defined benefit pensions and toward 401ktype plans.
He added We find there are a​ lot of​ people who need to​ be saving more than they are, if​ they hope to​ be able to​ afford a​ comfortable retirement.
Working in​ retirement may be one partial solution, said Michael Falcon, chief operating officer of​ the Retirement Group at​ Merrill Lyncha sponsor of​ the EBRI study, as​ well as​ its own New Retirement Survey. Seventyseven percent of​ our respondents say that ideally, they would work either fulltime, parttime, or​ cycle back and forth between work and leisure before they quit work completely, Falcon said. Working beyond normal retirement can obviously help financially, but Americans also say they are interested in​ working to​ stay socially and physically active.

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