The Retirement Challenge

Americans are living longer, 77 million baby boomers preparing to retire and there is a longstanding shift away from defined benefit employer pensions. A serious retirement challenge is rising. Are you ready for it?

Here are some sobering statistics from The 2008 Retirement Confidence Survey:

  • 62 percent of current retirees say their income is 70 percent or more of their pre-retirement income.
  • Fourteen percent of current workers said they thought they would need less than 50 percent of their pre-retirement income to live comfortably in retirement and another 36 percent expected to need 50-70 percent.
  • Nearly 6 in 10 current workers (59 percent) said they hope to have a retirement standard of living equal to or higher than in 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 6 in 10 (58 percent) said no. And of those who did do a retirement calculation, 8 percent said they arrived at an answer by guessing.
  • Nearly 6 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.
  • Among retirees who left the work force earlier than planned, more than half (54 percent) say they did so because of health problems or disability.
  • Almost half of retirees (44 percent) say they have spent more than expected on health care expenses.
  • 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 out-of-pocket medical expenses in retirement.
  • 52 percent of workers ages 55 and older say they and their spouses have accumulated less than $50,000 in retirement savings.

If you have not planned for your retirement, now is the time and here is how to start;

  1. Be honest with yourself and acknowledge what you do and don’t know about your finances.
  2. Practice basic budgeting skills. You can learn by taking the AFS personal financial management class Setting Your Financial Goals & Making a Budget.
  3. Take advantage of any employer paid financial planners and make an appointment to develop your retirement plan or visit a source like SmartMoney or AARP for tools and information about retirement planning.
  4. Complete the AFS class Introduction to Investing to learn how to grow your money and make it work for you now and in the retirement years.