According to the researchers' findings, 70 percent of the participants did not have a defined pension plan. For those who do not have additional forms of income or savings, their standard of living will have to be compromised after retirement. Also, some may be forced to ask family members for money or may have to live with them.
Of the participants who did have retirement savings, almost 60 percent had less than $250,000 saved. Almost 40 percent of the respondents had savings account balances below $100,000. For those who did have any form of retirement savings, about 50 percent earned less than $75,000 per year.
Researchers said that the average healthy male who is 65 years of age today has a 50 percent chance of living past 85, and that chance decreases to 25 percent for living past 90. Healthy females can add a few years to each of those percentages. According to researchers, a man who retires today at 65 years of age needs over $1 million in investments or savings to retire comfortably and live up to age 95. This is in addition to Social Security income.
Retiring a few years later can reduce the necessary amount to retire comfortably. For example, a man retiring at age 70 would need about $720,000 in investments and savings. Another way to reduce this estimate is to live in an area of the country where the cost of living is lower. This also closes the income gap between expected and actual expenses. Eliminating or reducing big expenses such as housing and transportation can also help.
The major challenges for soon-to-be retirees today are usually classified in the lack of their savings and preparedness. Since people are living longer average lifespans today, their time in retirement may last as long as their time in the workforce. For some, retirement may even be longer. The Bureau of Labor Statistics completes a survey each year about expenses of people in different age categories. In a comparison of the expenditures of retirees between 1984 and 2013, costs have tripled in most categories.
Over 42 million Americans were receiving Social Security income in 2015. The average annual income from Social Security was about $16,000 in 2015. With the rate of inflation, this may increase to $40,000 in the future. However, the government's talk of the Social Security program being cut or compromised in the future has many Americans wondering what will happen with their benefits. This is especially distressing to those who have no alternate retirement income source or savings.
It is important for all Baby Boomers to start saving and investing if they have not yet started. Younger generations should also start saving to lessen the burden later on. To learn more about retirement savings and investments, discuss concerns with an agent at 314-351-HALO (4256).