Hewitt Associates has just completed a study where they project that a retiree will need 126% of their pre retirement income in order to maintain their quality of life into retirement. This is a long term projection factoring in inflation, increasing lifespan and increasing medical costs in retirement. This number is higher than most of the other studies indicated. The exact number needed is subject to interpretation or estimation but what is certainly clear is that workers are not saving nearly enough to provide for a comfortable retirement. Social Security is likely to meet no more than about 30% of a retirees income needs. This assumes that the post babyboomers or late boomers will have any solvent SS benefits available at all. This gets even worse as income rises. 2/3 or retirees are saving less than 80% of their income needs. Only about 1 worker out of 5 will be able to retire comfortably without needing to significantly alter their standard of living.
The remaining 70-100% of income needs to come from savings, investments,IRA's, 401K or pension plans or equity harvested out of their home utilizing reverse mortgages.
We help clients determine where they are today and improve the picture for their future.
www.columbusfinancialplanningpros.com
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