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Not enough saved for retirement, study says
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More from BusinessNEW YORK — Four out of five workers aren't saving enough to maintain their lifestyle after retirement, with women being at a disadvantage because of their longer life spans and lower pay, according to a study released Tuesday.
On average, employees are projected to replace 85 percent of their income in retirement, compared to the 126 percent they would need when factoring in inflation, longer life spans and medical costs, the study by Hewitt Associates found.
The study looked at the projected retirement levels of nearly 2 million current workers of varying ages at 72 large U.S. companies and used actual employee balances. Of those studied, 67 percent are expected to have less than 80 percent of what they would need to maintain their lifestyle at retirement.
Those who don't contribute to 401(k)s face a bleaker future; they will likely be able to provide less than 40 percent of their projected needs, the study said. The study found that 19 percent were on track to be able to maintain their standard of living upon retirement.
While the same percentage of men and women contributed to retirement plans, women faced an 8 percent greater shortfall. The biggest reason for the gap was a disparity in pay; women earned an average of $57,000, while men earned an average of $84,000. Since medical costs are not adjusted by gender, women's savings didn't go as far.
Women are also expected to live longer, meaning that they have to spend at a lower rate while covering medical costs for a longer period. Finally, women tend to be in and out of the workforce more frequently for family reasons, leading to breaks in savings. The result was that women had accumulated 84 percent of pay, while men of the same age accumulated 101 percent.
Staying in the workforce longer can have a dramatic impact on retirement savings, said Sheryl Garrett, founder of Garrett Planning in Shawnee Mission, Kan. Working even just a few extra years can make a difference, she said.
Posted by SmashyCrashy on July 2, 2008 at 12:12 a.m. (Suggest removal)
I think everyone was planning on having the house pay for retirement.
That was Plan A.
Plan B was work as a greeter for Walmart.. Turns out Walmart doesn't need very many greeters.
I think a lot of people are wondering what plan C is.
Posted by scott_fx_2000 on July 2, 2008 at 6:51 a.m. (Suggest removal)
1) Only own an American Express Card your entire life. No minimum payment cards.
2) Pay your house off between 55-57 years old.
3) Double 401K Contributions for 30+ years from both spouses.
4) Don't live beyond your means.
5) Retire before your 58 without debt and a healthy chuck or change saved in the bank.
6) Start a small part time business that generates enough money to spend as "chump change" thoughout each week.
7) Die! Lol....This has been my retirement plan since I was 25 years old. I'm right on track, too.
Posted by Quark on July 12, 2008 at 4:03 p.m. (Suggest removal)
Plasma tvs, iPods, video game decks, SUVs, boats, trailers, pools and spas, ATVs, watercraft, exotic vacations, more house than you could afford and restaurants. That's where you retirement went. You rolled the dice on your house saving you but you lost. Too bad! You didn't listen to the warnings. I hope you enjoyed all your toys and goodies while you did. Now what are they worth. You will need 126% of what you make right now to retire at 80% of your current lifestyle.
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