My retirement plan has to be different from the what some experts say should be the required plan so that you retire happy, wild, and free.
In a typical retirement plan, American retirees will require resources equal to more than 15 times their final pay to maintain their standard of living after they retire, according to analysts at Hewitt Associates Inc.
About 80% of workers may fall short of meeting all their financial needs in retirement, says Hewitt Associates.
The figures come from a Hewitt study of projected retirement savings totals of about 2 million employees at 84 large U.S. companies.
After factoring in inflation and post-retirement medical costs, the analysts estimate that the employees will need 15.7 times final pay in retirement resources to meet financial needs in retirement.
Of that amount, Social Security is expected to provide 4.7 times final pay, the analysts estimate.
The remaining 11 times final pay will need to come from other sources, such as company-provided plans and personal savings, the analysts write.
Other findings in the study include:
About 80% of workers may fall short of meeting all their financial needs in retirement, says Hewitt Associates.
The figures come from a Hewitt study of projected retirement savings totals of about 2 million employees at 84 large U.S. companies.
After factoring in inflation and post-retirement medical costs, the analysts estimate that the employees will need 15.7 times final pay in retirement resources to meet financial needs in retirement.
Of that amount, Social Security is expected to provide 4.7 times final pay, the analysts estimate.
The remaining 11 times final pay will need to come from other sources, such as company-provided plans and personal savings, the analysts write.
Other findings in the study include:
- Only 18% of retirees who contribute to a defined contribution plan and work a full career are expected to achieve the 15.7 times final pay goal.
19% of retirees are expected to have a shortfall of 5 times final pay or more at retirement.
Workers who rely solely on a defined contribution plan to fund their retirement plan are projected to meet only 74% of their needs in retirement. Employees who are covered by an active or frozen defined benefit plan may be able to meet 91% of retirement needs.
First, are we talking about "wants" or "needs."
Plain and simple, everyone's needs have always been provided — otherwise they would be dead!
The problem with U.S. society today, and that includes many retirees, is that a need is any luxury that the neighbor happens to have.
Second, actuaries such as well-known Malcolm Hamilton give good reasons why the large majority of retirees, whether they live in Canada, the U.S., or other Western nations, can live on far less than 80 percent of their pre-retirement income.
Indeed, government statistics indicate that retirees live comfortably on 45 percent to 62 percent of their pre-retirement income, without needing a retirement job of any kind.
Although these studies by Hewitt and financial institutions indicate that retirees will require a relatively high income to support these "needs", the writing is on the wall: Most retirees will be living on a small fraction of the income that they made working.
And my guess is that many of these retirees will be just as happy as when they were working - or even happier.
My guess is based on the number of people who have written to me over the years about their experiences with retirement and unemployment.
Ernie J. Zelinski
Author of How to Retire Happy, Wild, and Free
(Over 125,000 copies sold and published in 9 languages)
The problem with U.S. society today, and that includes many retirees, is that a need is any luxury that the neighbor happens to have.
Second, actuaries such as well-known Malcolm Hamilton give good reasons why the large majority of retirees, whether they live in Canada, the U.S., or other Western nations, can live on far less than 80 percent of their pre-retirement income.
Indeed, government statistics indicate that retirees live comfortably on 45 percent to 62 percent of their pre-retirement income, without needing a retirement job of any kind.
Although these studies by Hewitt and financial institutions indicate that retirees will require a relatively high income to support these "needs", the writing is on the wall: Most retirees will be living on a small fraction of the income that they made working.
And my guess is that many of these retirees will be just as happy as when they were working - or even happier.
My guess is based on the number of people who have written to me over the years about their experiences with retirement and unemployment.
Ernie J. Zelinski
Author of How to Retire Happy, Wild, and Free
(Over 125,000 copies sold and published in 9 languages)
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