Aon Hewitt surveyed more than 425 U.S. employers to determine their current and future retirement benefit strategies. According to their research, you need to have eleven times your final working salary. So if you’re final annual salary is $50,000, you need to have saved $550,000 on top of Social Security earnings by age 65 to maintain your standard of living.
Most Americans, however, are only on track to save 8.8 times their final pay. Asians, African Americans and women are the hardest hit and most likely to join the ranks of the poor, which are already swelling at roughly 15 percent. According to this MSN Money article, 44 percent of Americans aren’t saving enough and may have little opportunity to increase their savings as they age.
Prior to the bursting of the housing bubble, most older Americans saw their homes as their nest egg and had relatively healthy retirement accounts, but by 2009 those gains were nearly gone.
Not too long ago, companies had pension plans and those pension plans, the employee’s savings account and Social Security benefits gave retirees a three legged stool to support them in their retirement. Now with pensions all but gone, Social Security benefits in crisis mode and most Americans with far less savings than they’ll need, we are staring headlong into a national crisis that has inspired doomsayers and movie makers and possibly dialog.
So how can you achieve a more doable balance? One answer is to postpone retirement until age 67 when you’ll only need 9.4 times your pay ($470,000). Better yet, if your health allows it, consider working until age 70 when you’ll receive the highest allowable amount of Social Security benefits. Here are some other steps to being more financially secure:
- Hire a financial planner to help you review your investment strategy to make sure you’re on target.
- Increase your retirement savings by just 1 percent to 2 percent each year.
- Take advantage of any retirement programs offered by your employer.
- Work part-time rather than going directly into full retirement.
- Pay off all of your debt before you retire.
- Consider having the kids move in with you or you with them.
What’s your financial strategy for your retirement? Send us an email at [email protected]