Will You Have Enough Money to Retire?


Boomer-age caregivers may be hard-pressed to make ends meet when they retire—which is why they may not be able to soon, according to two new studies.

A study by Bankers Life and Casualty Company's Center for a Secure Retirement found that about three out of four middle-income boomers say that their financial situation, not age, will determine when they retire. The group looked at 500 people between ages 47 and 65 with incomes between $25,000 and $75,000.

Their nest eggs weren't sizable: More than half had saved less than $100,000 for retirement, while 19% had saved less than $10,000. Another 14% did not have a pension, 401(k), IRA or any other type of retirement savings account. Consequently, the majority felt that they were behind where they had expected to be at this point in their lives in retirement savings, and only 10% said they were confident that they had enough money to live comfortably in retirement.

Meanwhile, a study by J.P. Morgan found that even workers who did have 401(k) s were often "completely in the dark" about the state of their retirement finances and whether they were on track to reach their goals. Their study of 1,000 workers showed that nearly half were scared that they would outlive their retirement savings, while two-thirds didn't even know how much they should be saving. Moreover, "Americans are also dangerously underestimating how much money they will need in retirement," the company said in a news release. About 45% of those surveyed thought they would need less than 75% of their pre-retirement income for a comfortable retirement; J.P. Morgan says retirees need to replace at least 70%.

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Whenever I see one of these statements that one needs to replace a given proportion of his/her pre-retirement income, I always figure it is written by someone who either spends most of his money as soon as it is received or assumes the readers do. Income and spending are different things, and in many cases one can live on much less than his income. I save about half my income for retirement, so obviously I don't need that much to support myself, and any unexpected money also goes into my retirement portfolio, now about 750K. I'm 60 now, and because of my thriftiness over the years on a moderate income (low 50s), I plan to retire at 62 1/2. If things ever get so bad in the US that I can't afford to live here, I will move overseas. Until then, I will continue to drive my 1989 Oldsmobile with 335K miles to work each day.
Based on the comments (original post was back in 2011), I'd imagine that for most, the past couple of years has been more dreadful than usual for adding to one's nest egg. If you're on this site, you've had first hand experience in the not very pretty reality of aging & the astounding cost of aging care in America.There is no way the US can continue with the current system. In 10 - 15 years, we will think of the old Medicaid system with it's 5 year lookback, exemptions on homesteads, and coverage of NH costs as the good olde days. Jacobsonbob perspective is spot-on (although I think he should wait closer to 70 to retire to maximize his SS payout). We're planning on living abroad too when we retire.
Pretty scary concept. With the Great Recession updating our conceptions, chances are the current and future generations will need to increase their working ages to accomodate for increased lifespans. No surprise that this would happen, but the surprise was that this new era came about so suddenly.