I recently read that the average baby boomer (ages 51 to 70) has a goal of accumulating enough of a nest egg to spend (on average) $45,500 a year in retirement income. According to a report from BlackRock, the average retirement portfolio has $136,200 in it, which would provide an average estimated annual income of $9,129, leaving them short over $36,000 per year!
Besides not saving enough, another part of the problem for baby boomers is they are invested far too conservatively. The average American retirement portfolio is 65% in cash, which can't provide the growth needed to achieve investment goals.
Generation X (ages 35 to 50) folks are not faring much better. Gen Xers' median savings for retirement has fallen 15% the last two years from $70,400 in 2012 to $59,800 today. Of those who have managed to set aside money for retirement, 42% have less than $50,000 saved. The bright side is Gen Xers have time on their side to catch up. At age 50, the "catch up" to retirement plan contributions kick in, allowing an additional $1,000 to be put in IRAs and an extra $6,000 in 401(k)s each year.
A hurdle faced by both generations is a lack of a disciplined plan to save for retirement. Less than a quarter of Americans regularly set aside money for long-term savings and just 14% have a formal financial plan.
Regardless of your age, it is never too early or late to create and implement a plan so there are no surprises when you reach the time in your life you want to consider cutting back or quitting work. If you would like us to look over your current retirement plan or want our help to create a new plan for you, please contact us.