WrapManager's Wealth Management Blog
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Are Investors Really Saving Enough for Retirement?

Posted by WrapManager's Investment Policy Committee
January 2, 2014

The short answer is no, according to a recent study conducted by the Center for Retirement Research at Boston College. Data in the study suggests that the gap between what people have saved, versus what they need for retirement, is quite significant and by any measure staggering. The funding gap is $6.6 trillion.1

The study examines several reasons why many investors are underfunding their retirement, but three factors stand out as particularly influential. When reviewing these findings below, it’s important for investors to weigh them respective to their own savings and investment plans, including how much retirement income they’ll need, in order to help determine how prepared they are for retirement.

Three Reasons Why Nest Eggs Aren’t Big Enough

1) Investors Aren’t Saving Enough

Some investors haven’t saved enough simply because they never determined how much they actually needed for retirement. This involves speaking with a financial advisor about what your retirement income needs are, and then determining an appropriate savings level and a desired return on investments over time needed to get there.

2) People are Living Longer

 

According to the Social Security Administration, life expectancies are closer to 80 years and people that are 65 years old now have a 25% chance of living to age 90.1 Investors should plan for retirement with higher life expectancies in mind, meaning the need to factor-in more savings.

3) The Great Recession is Having Lingering Effects

 

Many investors endured some losses during the most recent bear market, and some are yet to fully recover. For some, the market impact has also led to their taking a more cautious approach to investing, which may impact growth rates over time.

 

Speak with a Financial Advisor About Where You Stand

 

A great first step toward helping you determine how much you should save, or to ensure whether you’ve saved enough, is to speak with a financial advisor about your goals in retirement. A clear understanding of your desired retirement income can help you think better about what you need to do today to adequately prepare.

 

If you’d like to have a constructive conversation with one of our Wealth Managers about your retirement goals, please do not hesitate to give us a call at 1-800-541-7774.


Sources:

1 BlackRock

Retirement Planning Outliving Money