What do you think your retirement will be like? If you are like
many baby boomers, you may be pessimistic about it. Look at the
results of a recent poll conducted by the Associated Press and
NBC’s LifeGoesStrong.com:
What do you think your retirement will be like? If you are like many baby boomers, you may be pessimistic about it. Look at the results of a recent poll conducted by the Associated Press and NBC’s LifeGoesStrong.com:
– Only 11 percent of boomers think they will retire to a comfortable lifestyle.
– 24 percent of boomers say they have no retirement savings.
– 64 percent feel that Social Security will be their main source of retirement income.
– 25 percent of boomers in the work force say they will never retire.
– 66 percent of working boomers intend to work part-time or full-time after they end their careers. Yet the most recent Social Security Administration figures (2008) show that less than 50 percent of Americans age 65-74 earned income from a job.
Hopefully, you have reason for optimism. The poll found that about 1 in 10 respondents had more than $500,000 in dedicated retirement savings. Additionally, about half of those surveyed had retirement savings of more than $100,000.
If you don’t, what can you do to save your dream? Retiring later may help – it will give you added years of earned income and group health coverage. You can also apply for Social Security later, which can result in substantially greater benefits.
Don’t want to retire later? Then you may want to pour as much as you can into your 401(k) or IRA. If you are 50 and have a Roth IRA balance of about $80,000, you could potentially wind up with more than $450,000 in that IRA at age 65 if you contribute $5,000 per year and realize a 9 percent annual return.
A 50-year-old with a $250,000 401(k) balance could potentially end up with more than $1 million in that 401(k) by age 65 if he or she contributes $16,500 a year and gets an 8 percent annual return. (That’s not even factoring in employer matches and “catch-up” contributions after age 50.) However, note that this does not include trading commissions, account fees and inflation, which if taken into account, would lower these numbers.
Yes, tapping your home equity may prove useful – but tax reduction strategies and new income sources resulting from investments or insurance contracts might give you a little more breathing room so you don’t have to make that decision.
Start now, because procrastination is your greatest enemy. Meet with a financial professional – one with significant experience in retirement planning. You may have more options than you realize. Fight for your retirement dream!
