As I am starting to get closer to the retirement window, I am spending a lot more time looking at our retirement plan. The obvious question is how much will we need to live well in our retirement years and the obvious problem to solve is saving enough money and investing it well to become financially independent at the target age for retirement.
The Employee Benefit Research Institute conducts a Retirement Confidence Survey each year. And the results for 2006 are really quite alarming. Although the data is sourced from the United States, Canadians are generally in the same mode: spend now and worry about saving later.
According to the survey, more than two-thirds of workers — and more than half of those 55 or over — have less than $50,000 saved for retirement.
Only 64 percent are currently saving, a percentage that’s held fairly steady since 2002. Half of American workers say they thought they would need less than 70 percent of their pre-retirement income to live comfortably in retirement, another naively optimistic assumption.
Only 42 percent of workers say they or their spouses have taken the time to do a retirement needs calculation, and 8 percent of those said they guessed.
Only 39 percent of workers think they need to accumulate at least $500,000 for retirement, and 30 percent say they can make do with less than $250,000, an amount that invested at 5 percent would generate only $12,500 a year.
The Motley Fool has an interesting article called Prepare for a Gruesome Retirement. And they offer some resources to help prepare for retirement. Another good site for resource material is Choose To Save.