Will Your Retirement Mean Working Life Phase Two?
December 20, 2010 by MJP
Filed under Retirement Planning
If you are a middle class boomer, will your retirement life simply be phase two of your working life? That is a scary question. For a lot of middle class Americans, Wells Fargo has the answer. The data from this year’s Retirement Fitness survey is not pretty.
< The annual survey of middle class adults revealed some appallingly bad information about the retirement readiness of the middle class. First, 72% of middle class adults age 25-69 expect to be working in retirement. That’s interesting. Where do they expect these jobs to come from?
When you read the next data summary from the survey, it gets worse. A lot worse:
The median retirement savings of respondents age 50 to 59 is $29,000. Stretched out to fund a retirement of 20 years, these savings would amount to about $190 a month (assuming a 5% rate of return). Yet, 56% of the 50-somethings say they are “confident or very confident” they’ll have the money they need to support their desired lifestyle throughout retirement.
How can these baby boomers have confidence when their retirement savings will generate a mere $190/month (and that’s being generous)?
One of the survey evaluators provided this harsh but true comment:
Too many Americans have their heads in the sand in the face of obvious savings deficits. People are not even close to where they need to be in total savings. Barring a miracle, a winning lottery ticket or a big inheritance, they’re going to be forced to dramatically cut back their lifestyles after retirement.
The big problem is that lots of boomers do not appreciate the seriousness of their problem, as evidenced by this data:
- Only 33% of the survey participants have a detailed written retirement plan.
- 37% don’t know how much they’ll need or can’t estimate how long they’ll be able to live on what they have saved.
- 58% are confident that they’ll be able to retire comfortably. [What???]
- 62% say they have not changed their retirement savings rates in the two years since the recession began and only 16% have increased it.
I hope that regular readers here do not fall into the “head in the sand” category. There are plenty of resources talked about and linked to from this site. I encourage everyone to seek out and use them. There is nothing wrong with wanting to work in retirement but being forced to work because expectations do not meet reality is not a plan for me.
Here is the full news release about the retirement readiness survey.
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A lot of people that have their heads in the sand are overwhelmed by the large amount of money they have to accumulate to generate the needed income. A million dollars is a figure they simply can’t comprehend. They think it is impossible and since they can’t possibly do it, no one else can either. Since everyone else is in their position, someone else (maybe the government) will bail them out.
I think that anyone that needs to have a million dollars saved before they retire is delusional. Lets see, $50,000 per year for 20 years 65-85, plus pension, plus social security? come on, how much do you people spend? If you want to party like a rock star, you better be able to play the guitar. Of course if you still have to pay for that overpriced mini mansion, sailboat,condo in Florida, and the BMW in the driveway, I hope you have to work FOREVER.
I’m afraid it is all part of the mindset of entitlement and lack of self responsibility. “They” will take care of me. “I’ve worked hard so I’m entitled to a good retirement.”
As this and many other studies have pointed out, there is no connection between the real world and this type of thinking. The other reality is those who do save and plan will be penalized through tax increases or benefit reductions to pay for the millions who haven’t got a clue.