BOSTON (CBS) – Fidelity released the results of its first ever Retirement IQ Survey last week and found that many Americans find the subject of retirement planning to be a daunting prospect and struggle with how best to identify how much they’ll need to save, how to make their money last throughout retirement—as well as where to start.
I could have saved Fidelity a lot of time for our listeners our concerned with the very same issues. When should they start to save is also a big concern among Millennials.
Fidelity found folks are missing the mark on key retirement questions and there are myths and misconceptions that could be holding them back. Many of those surveyed had misunderstandings in every area, including those 55 or older, whose retirement is less than ten years away.
They politely are saying many folks flunked. I am hoping for better results from our listeners.
Jeff, how about if you take the survey to gauge how much of an influence I have had on you these last 20 months. There are only 8 questions in the Fidelity survey.
Question #1: Roughly how much do investment professionals estimate people should save by the time they retire?
Answer: The correct response according to Fidelity is “at least 10 times the amount of one’s last full year’s income.
Even if there is some debate among professionals around how much the average person needs to save, nearly three-quarters of the respondents underestimated how much is needed. Furthermore, 25% of respondents expected to only need to save 2-3 times the amount of their last full year income, a number that is well below suggested targets.
That’s all well and good but if you are earning $50,000 a year 10 times that equates to $500,000 you would need to have accumulated by retirement and that may be an impossibility. Anything you can save will be helpful. And I do understand the concern of the experts if you have a $100,000 as you go into retirement you may have trouble maintaining your current life style.
Current US savings rate is 5.5%, in 2012 very briefly it was up to 11%.
My observation: no one has ever saved too much for retirement!
Fidelity created a quick quiz covering just 5 retirement facts that every worker should understand. So, I am going to challenge our listeners to take the quiz.
You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.
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