According to a new study, a lot of those reaching retirement age in coming years may not have enough set aside to keep their golden years golden.
This recently released study from the Employee Benefit Research Institute suggests that nearly half (47%) of “early boomers” – those between the ages of 56 and 62 – could run out of money in retirement.
While that sounds bad, it’s actually a major improvement over seven years ago, when a similar study revealed that 59% of the same group faced a retirement savings shortage. The Employee Benefit Research Institute suggests that the improvement comes from relatively recent rules that promote automatic enrollment in 401k and 403b work-related retirement plans, as well as expanded contribution allowances.
Not surprisingly, the odds of not having enough in retirement escalate for lower-paid workers.
People now making between about $30,000/yr. and $72,000/yr. have about 30% odds of not having enough to pay the bills after 20 years in retirement. Those making more than $72,000 have only a 13% chance of not having enough.
The biggest single potential problem for those facing retirement is uninsured health costs, particularly long-term nursing home care, an expense not covered by Medicare.
The obvious solution for those facing a retirement shortfall is to save more.
There are several web-based calculators that can help estimate the amount of retirement savings needed based on current income, expected future needs, contributions from Social Security and other factors. The problem? The final amount of retirement savings you’ll need will ultimately completely depend on the one factor nobody can know: how long you’ll live.
Here are links to a few retirement calculators:
- Ing “Your Number” Calculator
- Vanguard Retirement Calculator
- Motley Fool Retirement Calculator
- CNN/Money Retirement Planner