What's Your Retirement Plan?
A recent study by Transamerica's Center for Retirement Studies concludes that for a large portion of folks, "never retiring" is their plan A. Alas, a significant percentage of the eager-to-keep-working population is unprepared with a plan B in case they find themselves involuntarily removed from the workforce. And as Catherine Collinson, President of Transamerica's Center for Retirement Studies points out, "Planning not to retire is simply not a viable retirement strategy."
Here are the three stats from this extensive TCFRS survey that struck me smack in the gut. I'll follow them up with some action steps that you can take to make yourself a role-model for preparing for the new retirement realities.
- American workers estimate their median retirement savings needs at $600,000. Unfortunately, a mere 30% currently have over $100,000 saved in retirement accounts. With a $600,000 nest egg, you could withdraw $24,000 a year (based on the 4% rule). Add to that Social Security, which right now could run from say $13,000 - $23,000 a year depending upon your household composition and work history, and you are looking at retirement income in the range of $37,000 to $47,000. That works. But at a level of savings below $100,000, you are looking at something closer to $22,000 in annual retirement income (using midpoints). Ouch. Not nearly as pretty of a picture.
So yada, yada, yada -- you might very well be thinking. What the heck, Manisha, can I actually do about this in MY LIFE TODAY? Here are my top 3 tips for you, inspired by Catherine Collinson's extensive and excellent work on the topic.
- Teach yourself to financially fish. Just like you seek out an expert guide with your physical health or your spiritual development, commit to educating yourself about the basics. You can take the inexpensive online financial literacy course I offer, Money Rules... For Women (meant literally & figuratively) for $39... or go to your library and read one of the many wonderful personal finance books and magazines available. One of my favorites is Michael R. Piper's Can I Retire?. I also strongly recommend reading Mark Miller's wonderful blog, Retirement Revised. Two websites I love with great retirement calculators are EBRI's Ballpark Retirement Calculator and FIREcalc.
What about you -- do you talk about retirement planning in your household? Do you have any tips to share with fellow readers about what has worked well for you? We'd love to here your thoughts!
[This post originally appeared at ManishaThakor.com.] Want more financial love? You can follow Women's Financial Literacy Initiative founder, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative new online personal finance course called "Money Rules."