Standard Of Living In Retirement

Retiring Boomers will find their 401(k) plans falling short, says The Wall Street Journal. Less than a quarter of 401(k) account holders ages 60 to 62 have enough money saved to maintain their standard of living in retirement. According to data from the Federal Reserve, and analyzed by the Center for Retirement Research at Boston College, they concluded that, even when counting Social Security and any pensions or other savings, most 401(k) participants appear to have insufficient savings to FULLY fund their retirement years.

Retirement in America will never be the same, says Allianz Life Insurance Company of North America. A recent survey found that the “76 million baby boomer generation” is facing one of the greatest retirement INCOME challenges in history; and the challenge is THREE fold. They attribute: once-reliable income sources as quickly DISAPPEARING or becoming less dependable; INCREASING life expectancies, and the growing number of years spent in retirement; and INCREASED personal responsibility for retirement savings, and market volatility, as the reasons why “disaster” is looming for many boomers future retirement plans.

Ok, so what’s really going on here? Let’s “check” the facts using our Checks and Balances process.

The retirement savings plans that many boomers thought they could COUNT on to fund their golden years are falling SHORT of their expectations, way short in many circumstances. The 401(k) generation is beginning to retire and, according to the Wall Street Journal, it isn’t a pretty site. There are “big gaps” between what people have SAVED and what they will NEED, and the financial crisis has made these gaps even worse. The Employee Benefit Research Institute reported last quarter that the national retirement income deficit WITH Social Security benefits is 4.6 trillion dollars, and WITHOUT Social Security benefits the deficit nearly doubles to $8.5 trillion. The most recent Retirement Confidence Survey found that nearly half of all Baby Boomers are NOT at all confident they will have enough money to live comfortably in retirement.

Boomers facing financial shortfalls have already begun making lifestyle changes, including postponing retirement, moving to less expensive housing, cutting back on expenses, taking bigger financial risks in an effort to recoup previous years stock market losses, and other drastic measures. Many are working a part-time job, and know they will continue to do so well into their retirement years. Boomers are under-prepared in FUNDING their retirement for many reasons; the most common is their failure to adequately SAVE. In general, many boomers were uninformed or misinformed about how much money they would actually NEED to retire, and how little their 401(k) plan, with minimal contributions would actually provide them come retirement time. Many others were counting on their homes or individual investments to make up the difference, but by 2009, about 50% of the previous wealth by boomers were LOST due to shrinking 401(k) accounts and the real estate collapse.