Retirement Savings Statistics

Retirement savings statistics are published on a regular basis in newspapers and magazines. Recently, some statistics were published on the front page of the Business section in the August 2, 2008 Charlotte Observer. The paper reported on a study done by Ernst & Young LLP done for the Americans for Secure Retirement.

• Nearly 3 out of 4 middle income households in the Carolinas that plan to retire in the next 7 years will outlive their retirement savings.
• 3 out of 5 new middle class retirees would run out of savings and have to reduce their standard of living by nearly 25%.
• Those planning to retire in the next decade would need to reduce their standard of living by more than 1/3rd.

Retirees will run out of savings because of fluctuating investment returns and longer lives.

My guess is that these statistics also hold for the rest of the country, not just for the Carolinas.This should be a wake-up call that all of us need to have a financial plan for retirement. The future is never predictable and we need to be prepared.