While no one would say I am a financial genius (except me), I do try to keep up on what is going on in the money world. I subscribe to many financial blogs, and I really like this one: Free Money Finance. They do a great job of keeping me (and many others, of course) up to date on financial issues like debt, retirement, the Fed, etc. I wanted to share a post from them about retirement and how the majority of us are not ready. At all. Scary. I think I should go save some money, yes?
From the site:
“Here’s a piece from Money magazine that highlights how many people are unprepared for retirement (at least 10% short of their income target in retirement). Here’s who’s primarily at risk:
* Low-income Gen Xers (born between 1965 and 1972): 60 percent are at risk of having insufficient funds in retirement.
* Low-income late boomers (born 1955-1964): 54% are at risk.
* Middle-income GenXers: 46% are at risk.
* Two-earner GenX couples: 53% at risk, since they often receive less generous Social Security benefits than one-earner couples.
* Single GenX women: 52% at risk, since they are more likely to be in the bottom third of income earners.
The article then lists why more and more people are at risk:
* Life expectancy is on the rise.
* Defined-benefit pensions are on the decline.
* Social Security benefits will replace a smaller percentage of one’s pre-retirement income as the age at which workers become eligible for full benefits rises from 65 to 67.
* 401(k) balances are not high. The median balance is $60,000 among households nearing retirement.
* Most workers don’t save for retirement outside of their 401(k)s.
I’ve highlighted this fact before in Americans Think Retirement Savings Going Well, but They Need to Think Again. People think they are saving enough for retirement, but they really aren’t. As for me, I’m fully contributing to my 401k (and saving some additional dollars as well) as well as working to get a firm retirement number for our family.
One comment I want to really emphasize is the last one made by the article — that most people aren’t saving for retirement outside their 401k’s (and those are underfunded). It’s likely that most of the people reading this will not only need to save through their 401k’s, but also have additional savings, to get to the amount they need for retirement. The only way to know if you need to or not is to set your own retirement number.
A couple solutions for people who are underfunded in retirement savings are to work longer and/or consider moving to a foreign country (or at least a cheaper part of the U.S.).”