If you’re still working and you’re wondering if you’re on target with your retirement savings goals, the answer could very well be “no.” According to a recent survey by the Employee Benefit Research Institute (EBRI), a surprisingly large number of Americans have set aside less than $25,000 for their retirement.
If you’ve saved more than that, you’re ahead of the game, but don’t get too excited. It’s likely you’ll need far more than you’ve got socked away to enjoy financial security in retirement.
Too little savings
EBRI’s survey finds that 47% of American workers have less than $25,000 set aside for retirement, and while a separate PricewaterhouseCoopers survey shows that older workers have more money set aside, they’re savings are likely to come up short in retirement, too. According to PWC, about half of all baby boomers have less than $100,000 in retirement savings, and nearly one-third of them have less than $50,000.
Advisors recommend that if retirees don’t want to outlive their savings, they shouldn’t withdraw more than 4% of their retirement savings annually. At that rate, someone with $25,000 in savings could withdraw just $1,000 per year, and baby boomers with $100,000 could only withdraw $4,000 per year. That’s unlikely to make much of a dent in the average retiree’s spending, given that the Bureau of Labor Statistics reports that the average age-65-or-older household spends $44,664 per year.
Relying too heavily on Social Security?
Since fewer Americans receive retirement pensions, many retirees are counting on Social Security for a lot of their retirement income. That might not be wise. This year, the average retired worker is receiving just $1,360 in monthly Social Security income.
Depending on your own work history, you could get more (or less) than that amount, but even if you qualify for the biggest Social Security payout possible, you probably won’t be living a life of luxury. Currently, the maximum retired workers can receive in Social…