Do you think that you might wait until you’re 80 to retire? I read an article the other day that just flat out amazed me. It was that more Americans are now delaying their retirement until they are in their 80s. In fact, in one survey, 30% now think they will work until they are 80 or older. This is up from 25% about a year ago. The survey was of 100,000 adults with incomes less than $100,000.
Tough to save for retirement
One person pointed out that it is so difficult now for most Americans to put away money for retirement that they will just have to work longer. In fact, 70% of those who responded to the survey said they planned to continue to work when retired because they feel they won’t be able to retire full-time. Of course, as one person pointed out, working into your 70s or 80s isn’t always realistic. While they might want to continue working, many employers simply don’t really want people around when they get that old. And, of course, there can be health issues.
How people are getting ready to retire
About one third of Americans say they expect that their retirement income will be 50% or less of what they currently earn. However, data from the Census Bureau shows $50,054 as the median household income, meaning that retirees would be living on about $25,000 a year or less – which would certainly not be a very comfortable retirement.
Not saving for retirement
Today, probably due to the Great Recession, about 50% of middle-class Americans say that saving for their retirement is on the back burner. This is because their biggest financial concern is just paying each month’s bills. Of course, this is somewhat overshadowed by the fact that people responding to the survey said that vacation planning and home remodeling have taken priority over saving for retirement.
A huge disparity
This survey also revealed that there is a big gap between what people have saved and how much they actually need. Most said they thought they would need $300,000 in total savings to support themselves but had saved only $25,000. More than half – 53% – of Americans say they don’t know if they will have enough saved for retirement, which is up from 42% last year.
They’re not counting on the government
About half of those who responded to the survey thought they would fund their retirement through saving and investing. Another 27% thought they would fund it through their employer’s plan. Only 24% said they would rely mainly on their Social Security benefits.
No time for guesswork
Another reason why many Americans are in no position to fund their retirement adequately is because they really haven’t an idea as to how much they need to save. In fact, less than a quarter or 22% said that they had actually sat down and computed the amount of money they will need for retirement In comparison the other three quarters said they were just guessing, which can be a dangerous thing to do. For example, respondents estimated that in retirement the median cost of their health care would be $47,000 in out-of-pocket expenses. However, industry estimates put that nearer to $260,000 or more.
The lessons to be learned
If you’re 10 or 20 years from retiring, you need to not guess as to how much money you will need to retire comfortably but sit down and actually calculate it. And if your answer is to work into your 80s, you might want to think again. While we would all like to think we’re going to live that long, it’s far from being guaranteed.