Will I Have Enough to Retire?
Will I have enough to retire is a top question for most American workers. Most employees are not sure how to answer the question, will I have enough money to retire? In fact, most are not confident they’re preparing correctly. They simply do not really know how much they need to live well in their post-work years.
Despite their trepidation about answering the question, will I have enough to retire, Americans have lofty goals for those years. Many envision retirement as the most liberating time in their lives, according to CNBC reporting on a TD Ameritrade survey. The financial services giant polled 2,002 adults in July about their perceptions of aging and retirement. Eighty-one percent of respondents said their elder years are a prime time to pursue new goals, while 76% said they plan to use those years to pursue passions they neglected during their earning years. This includes spending time with friends and family, traveling abroad or taking up a hobby.
Many Americans aren’t sure how to align their dreams with their retirement savings. Slightly more than half (51%) of those surveyed by TD Ameritrade answered, Will I have enough to retire question, in the negative. Indicating, they do not think they’ll have adequate savings to pay for their needs. A full 60% don’t know how much they’ll need to save to sustain their lifestyle after age 65.
Social Security and health care costs are a chief concern among those responding to the question, Will I have enough to retire? TD Ameritrade found that that 72% of those surveyed do not believe Social Security will support their financial needs in retirement. Most said they were more concerned with funding their health-care costs than dying. Their Primary concern, keeping them up at night was declining health — specifically the loss of mental and physical abilities.
Plan sponsors can help employees to answer the question, Will I have enough to retire, in several ways. For starters, employees need to get clear on their financial plan for retirement, they need to reasonably estimate how long their savings will last. Then determine whether they’ll outlive the savings. Annual retirement income projections can help workers have a sense for whether they are on track to sustain their lifestyle in retirement and be in the position to course correct as needed. Of course, the earlier an individual evaluates and adjusts their financial plan vis a vis their savings, the better. However, even pre-retirees have opportunities to bulk up their retirement nest egg through catch-up contributions. This can be accomplished via their workplace qualified savings plan. (The 2018 IRS catch-up contribution limit is $6,000 for those age 50 and older. The regular contribution limit is $18,500. So, employees over age 50 could sock-away a maximum of $24,500). Since the 10 to 15 years leading up to retirement typically are an individual’s prime earnings years, that may be the period where most contributions are likely to occur.
A critical exercise for employees is in determining retirement lifestyle wants vs. needs. In the CNBC article, for example, one expert recommends using “lifetime income” sources such as Social Security, pensions, or annuities to cover recurring expenses, and tapping retirement savings for “other expenses.” On that note, it’s also important to remind employees that retirement is often accompanied by a radical shift in mindset. In other words, it’s less about growing and saving one’s money, and more about asset protection, income creation and planning for the unexpected.
Many people ask the question, will I have enough money to retire, without having a clue about how to proceed after asking the question. However, by undertaking a financial planning exercise and conducting a need vs. wants assessment, they can work toward formulating a more accurate response to that question. This enables them, to adjust their savings as needed to reach their goals. Once their savings are on track, they can look forward to spending their post-working years doing what they love, instead of struggling with, will I have enough to retire?
