How much money will you really need to retire?
Annual retirement confidence survey
Increased confidence about retirement doesn't necessarily mean Americans are saving more - or know how much retirement may cost, according to a 2002 survey by the Employee Benefit Research Institute ®.
General findings
The Retirement Confidence Survey ®found that 70 percent of American workers are "very or somewhat" confident that they will have enough money to live comfortably in retirement, up from 63 percent the previous year. In contrast, only a third of the workers surveyed have actually calculated what retirement may cost - down from 39 percent in 2001. Almost half of survey respondents have saved less than $50,000 - with 15 percent saying they have no retirement savings.
Income needed in retirement
The survey - conducted through interviews with 1,000 individuals - revealed that many workers have a sketchy understanding of the financial realities of retirement. Financial experts estimate that retirees will need 70 percent to 85 percent of their pre-retirement income, yet almost half of the survey respondents believe they will need less than 60 percent to retire comfortably.
Retirement income sources and savings
Although 30 percent of workers surveyed expect that their biggest source of income will be from money invested in a retirement plan at work, 13 percent of all workers look to Social Security as their leading income source. (It is estimated that Social Security will provide only about 40 percent of your retirement spending needs, depending on your income level.)
Although nearly half of the workers surveyed expect to spend at least 20 years in retirement, less than one-fourth of workers 40 to 59 years of age have saved $100,000.
Some good news
Even though people aren't saving enough, the survey revealed that many people have started planning for retirement:
- Two-thirds of workers report having saved personally for retirement, and 85 percent of those respondents or their spouses are currently doing so.
- Although only about a third of those who answered attempted to calculate how much retirement might cost them, 45 percent of those respondents made changes in their retirement planning as a result.
- Two-thirds indicate their current employers offer a retirement savings plan that allows them to make tax-deferred contributions. And 81 percent of these workers contribute to the plan.
Remember: Saving an additional $20 a week through your retirement plan could make a big difference in funding your retirement.
To help you plan for retirement or to get your plan on track, talk to a financial adviser.
