Aug. 21, 2002 — Many Americans middle age and older believe they will have enough money for a comfortable retirement — until they find out what retirement will actually cost — a recent survey found.
Sixty-four percent of Americans between the ages of 45 and 65 with household incomes of at least $75,000 said they were confident they would have enough money for a comfortable retirement, but after a reality check, only 32% said they were confident they would have enough, a survey commissioned by Charles Schwab & Co. found.
Data from the survey, in fact, suggests that they are saving far too little.
While 59% believe their living expenses in retirement will be at least the same or higher than they are today, the median level of accumulated retirement savings reported by survey respondents was only $104,000. More than half of the respondents (56%) said they had less than $250,000 saved; almost a third (31%) said they had less than $100,000. The average age of respondents was 52 years, with an average timeline of 11.8 years remaining until planned retirement.
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Schwab maintains that an individual will need approximately $230,000 in retirement savings in today’s dollars for every $1,000 of desired monthly income in retirement. In other words, in order to produce an annual income of $75,000 today, a retiree would need $1.4 million in savings.
The survey shows that even higher-income individuals aren’t taking full advantage of retirement saving vehicles. In fact, 41% of those with some type of employer-sponsored retirement plan at work (whether a 401(k), 403(b), or 457 plan) contribute less than the maximum allowed. In addition, two-thirds (67%) have not contributed to an IRA this year, and at least 63% of these do not plan to.