BOSTON (CBS) – According to a survey by Bankrate.com last summer, Boomers are retiring at the worst time in a generation. They cite the low yields on bonds and stock dividends which they believe will prevent retirees from having enough fixed income in retirement.
Their survey points out that this is a group that never saved like their parents and grandparents. Pension plans also have largely disappeared from the private sector, home values aren’t any higher than they were 10 years ago, and Medicare is a perennial target of budget cutters in Congress.
So what is a Boomer to do? I am sure praying might help, but most don’t have a clue as to how much money they will need to create a comfortable retirement. Most are not on track to save enough and one in five are banking on Social Security to be there main source of income.
Many experts believe you are going to need to have $1M saved for a comfortable retirement.
They also say you’ll need between 70-80% of your current income in retirement. But you really need to try to project how much income you’ll need in retirement.
Most Boomers have not saved a million dollars and if you have, you are golden. But the reality is that you can get by quite nicely on less.
Start by reviewing your current expenses. The closer you are to retiring the more accurate this exercise will be. How much does it cost you annually to maintain your lifestyle?
Now add in any extra expenses you may anticipate in retirement such as traveling, hobbies and medical expenses. That will give you a number in today’s dollars. Now we just have to figure out what that number will look like in the future.
Your retirement plan provider at work has a calculator you can access online and the one I use most often is at Choose to Save. AARP also has a retirement planning calculator and some good material on their website.
One more thing: The major mutual fund companies, Fidelity, Vanguard and T Rowe Price also have calculators as well as good information on their sites. T Rowe Price has also added a Social Security Benefits Evaluator.
So often people get discouraged because after doing the calculations they realize that the dream of retiring early may be just that – a dream. So to make it a reality you may have to change your current lifestyle to save more now or plan to work part time in retirement. Or both! Take the time to find out where you are in reaching your goal of a comfortable retirement.