The American workforce is generally behind in planning for retirement. According to the Employee Benefit Research Institute and Wells Fargo, only 33% of all workers have calculated their income and expenses for the retirement years. This statistic is mind-blowing considering the importance of planning financially for the potential decades of retirement. The Wells Fargo poll showed that just over 40% of people have “not thought much about it” when asked about their retirement income.
Planning and strategizing one’s financial situation for retirement is vitally important. Recent retirees have the highest net worth of any age group, but without proper planning and management of their resources, these amounts can be quickly depleted. Income is often based on pension or retirement accounts, but according to the survey 39% of investors over the age of 60 that were surveyed looked at their social security benefits “a little” to "not at all".
Income is not the only thing to worry about after working, it also involves the preparation of medical expenses, long-term care, and large, unplanned expenses. While these areas of concern should be an important part of all financial plans no matter the person’s age, people that are retiring should focus on these areas more closely. Like social security, it is reported that only 59% of investors have analyzed their medical expense coverage a “fair amount” or more. This statistic becomes scarier when correlated with the fact that Fidelity's research shows that the total healthcare costs a 65-year-old couple will incur through the rest of their retirement averages out to $275,000.
The idea that one should have one million dollars saved for retirement is a common rule of thumb, but according to a 2016 survey by Fidelity, only 14% of Americans have more than $250,000 saved for retirement. The total amount saved for retirement is largely dependent upon the income of the retirees but getting started planning early can also have enormous impacts on your preparation for retirement. The earlier one begins planning, the sooner one may realize the importance of spending less, saving more, investing wisely and the impact of all the other moving pieces.
If you have questions about how much you should be saving for retirement, please call us at (508) 655-0210 and ask to speak with one of our advisors.