Think about those 380 Facebook friends you have. Odds are, you went to school with many of them or you might be related to them, but either way you slice it, half of those friends are not saving enough money to sustain them during their elder years. This means they won’t be able to cover important living expenses in retirement, cover the rising costs of medication and won’t be prepared for an unexpected hospital stay. A new survey by Fidelity Investments showed that 55% of Americans will retire unprepared. The survey included 2,200 American households and of those who responded, one third were somewhat prepared and said they would agree they are halfway to that magic number. Another 12 percent reported they can cover their living expenses, but little else. Another 14 percent said they would not be able to cover any kind of expenses and would have to change their lifestyles significantly and 41 percent say they were “so underfunded for retirement that they would be able to retire”.
Fidelity Executive Vice President John Sweeney said, “When you factor in the expectations many have of an early retirement, along with increasing longevity and sometimes overly conservative asset mixes for investments, you can see why many people are not as prepared as they need to be to cover their expected expenses in retirement.”
While these numbers are anything but comfortable, as estate planning lawyers, we know that it’s not too late to begin your preparations for retirement. It could be that you need to tweak your savings efforts, maybe make a few investments or even defer your retirement plans. Sweeney admits it’s challenging, “Although it requires discipline and some trade-offs, there are important steps people can take to accelerate their retirement savings and get closer to where they need to be in the long run, no matter what their age or income level,” Sweeney said.
The survey found that baby boomers who were born between 1946 and 1964 were actually better prepared for retirement and in fact, would likely be able to cover about 81% of what they’ll need in retirement. Meanwhile, the younger generation, those born between 1978 and 1988 were least prepared. These younger workers are, on average, around the 61% mark in terms of the money they’ll need to cover retirement expenses. “This number is a concern, since the survey indicated many anticipate retiring early, despite the fact they probably won’t have the benefit of a pension, as their parents did,” Fidelity said in a news release. “The good news for this generation: time is on their side, which means they can improve their situation by increasing their savings rate and investing for growth.”
It’s never too late or too soon to start. Many clients feel they’ve either waited too long to begin their retirement planning efforts or they feel as though they have no other options available to them in terms of medical and long term care or issues surrounding their finances.
If you have questions about your retirement plans, estate planning or other financial planning, we welcome the opportunity to review your options so that you’re moving forward in a way that puts right where you need to be when the time comes. Remember, it’s about moving forward, complete with the ebbs and flows of life, but prepared nonetheless.