Many Americans are heading for delayed or difficult retirements, and may not be able to maintain their current standard of living. A new poll conducted by Harris Interactive for the American Institute of CPAs found that there is a significant gap between reality and what the public thinks regarding their chances of achieving their retirement goals.
Almost half of the poll’s respondents, 46%, expect to fund their retirement through Social Security and pensions, and an equal number expect that their retirement funds will last them for 10 to 20 years. The fact is, people are living longer these days, and they should plan on living for perhaps another 30 years, or more, after they retire. In addition, Social Security was intended to be nothing more than a supplement to retirees’ income – not their main source of income. On top of that, more and more companies are eliminating, or reducing, their pension benefits.
Americans are also underestimating how much they will need to fund their retirement years. 39% of survey respondents believe that as little as $500,000 will be sufficient. However, if trying to make this amount last over the course of 30 years, withdrawing more than just $20,000 per year puts a retiree at increased risk of outliving his/her savings. Many people will need to save far more than they anticipate, based in part on the following issues:
The bottom line is that many Americans are in denial about their chances of achieving their retirement goals, and should take a serious look at how on track they are to retire when they’d like to do so. It’s better to start “bridging the gap” now, because waiting any longer will only make the problem more difficult in the future. Mentor Capital provides comprehensive retirement planning advice to our clients, and we’d be glad to help you, too. Give us a call when you’re ready to get serious about planning for your retirement.