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8 surprising truths about retirement

Is 80 really the new retirement age? Why are 30-somethings least confident about retirement?

By Stacy Johnson Oct 25, 2012 2:10PM

This post comes from Renee Morad at partner site Money Talks News.


Money Talks News logoThis week is National Save for Retirement Week, an educational campaign to raise public awareness about the importance of long-term retirement planning. The program, created by bipartisan congressional action, encourages Americans to utilize retirement savings and investment plan strategies. The week also encourages individuals to reflect on their current financial situations and their potential for a secure retirement. 


With that in mind, here are some surprising statistics and insights on where Americans stand today, as well as their expectations, fears and hopes about retiring.

1. How much money do we need to retire? There's no real rule of thumb.

There are varying estimates of how much money an individual needs to retire. One guideline suggests $1 million, while another recommends you save 10 times your last annual salary. But there's no one-size-fits-all approach, and you'll have to consider a variety of factors to determine what's best for you and your family -- like your age and current annual income, desired retirement age and income, and expected annual pension and Social Security payments. Then, of course, your personal spending habits weigh in.


Plenty of retirement calculators are available online. Working with a fee-only financial adviser can also help determine how much money you'll need.


Image: Bundles of US one hundred dollar bills in bird © Don Farrall/Photodisc/Getty Images2. Half of Americans aren't saving for retirement.

According to a Life Insurance and Market Research Association study, 49% of Americans say they aren't contributing to any retirement plan. Those least likely to save for retirement: individuals between ages 18 and 34.


What are Americans doing instead? In a survey by Wells Fargo, planning a home remodeling and planning a vacation ranked higher on the list of priorities within the past year than planning for retirement (which ranked third).


3. 80 is the new retirement age?

Apparently 80 is the new 65 for many middle-class Americans when it comes to retirement. One-third of survey respondents plan to delay retirement till age 80 or older, according to a Wells Fargo study of 1,000 adults with income less than $100,000. That's up from 25% who planned to retire at age 80 in last year's survey.


A study by My New Financial Advisor, a service that connects clients with advisers, suggests the average baby boomer will retire at age 75. Some of the top factors preventing an earlier retirement: loss of income, insufficient savings and low returns.


4. The majority of middle-class Americans aren't confident about the stock market.

According to the Wells Fargo study, 70% of middle-class Americans aren't comfortable investing retirement money in the stock market. When survey respondents were asked what they'd do if given $5,000 to invest for retirement, only 24% said they'd invest in stocks -- compared with 40% who would choose a CD or savings account and another 22% who would invest in gold or other precious metals.


5. Women are less engaged in retirement planning.

Women are more concerned about retirement risks than men are, according to a Life Insurance and Market Research Association study, but they're less likely to do anything about it.


Only one-third of women are actively involved in their family's retirement planning, compared with nearly half of men. Also, 32% of women admit they do no retirement planning at all.


6. More Americans have tapped retirement funds.

By 2010, 21% of Americans who could tap their 401k's for loans had done so, the highest percentage since 1996, according to the Employee Benefit Research Institute. The average loan size was 14% of the remaining account balance.


7. Employers are more willing to offer 401k plans, but many employees don't care.

About 95% of companies are back to matching 401k plans, but only 30% of employees are taking advantage of this, according to a survey by the nonprofit Plan Sponsor Council of America.


The reality: Many individuals need their current income for living expenses and can't afford to put it away.


8. Forty percent of Americans fear lack of retirement funds.

Nearly four in 10 Americans are worried they won't have enough money saved to retire, according to a Pew Research Center survey. The fear is more prevalent today than it was at the end of the Great Recession in 2009.


Thirty-somethings are among the most worried: Half of adults age 36 to 40 are worried they won't be able to save enough to sustain a comfortable retirement, the Pew survey said. This age group was reportedly more concerned than those near or at retirement age.


More on Money Talks News and MSN Money:

Oct 26, 2012 10:55AM
1. Live below your means.
2. Use your employers 401K contribution.
3. Pay off your house loan, no home equity loans.
4. Invest your savings wisely. Use caution in today's market. No get rich quick schemes.
5. You don't need to buy a new Apple product every 6 months.
6. Spend your money wisely.
7. Make your home more energy efficient.
8. Save your hard earned money, screw spending foolishly to keep up with the Jones-es

I retired this year at 53

Oct 26, 2012 8:17AM
Thirty years ago, the rule of thumb was you needed 300K to retire. Now that figure is 1 million. What will it be in another thirty years? What will that 1 million be worth in todays dollars, 10 years into your retirement? What is the minimum annual wage you would need to save a million in 30-40 years? How many people are capable of earning that? Everyone should save for their old age, but with so many variables, it's a lot harder than it looks.
Oct 26, 2012 11:35AM

In 1960, my dad was an insurance salesman and I remember him telling me the recommended amount was 7 times your last year’s income.  As a general rule, this has not changed and is adequate for a starting point for everyone.  If only humans were able to plan 40 years in advance but that behavior does not seem to be part of the human genome for the general population.  If you tell a person making 100k that they need 700k plus social security to continue their lifestyle in retirement, you will not make a sell and instead be ridiculed.  Consequently, there is no need to suggest 10, 20, or 30 times their income if a lower amounts freeze them into inaction.


The only solution I see is to make participation in a 401k/403b account mandatory at some level higher than 5%, force them into a balanced fund and allow them to see the balance but never borrow or take it out until retirement. People put too little in, make bad investment decisions, borrow without repaying, and spend without rolling over when they change jobs.  If this was done, the amount needed for retirement becomes moot.  If you want a better retirement, those few would simply save more outside of their employer retirement plan.

Oct 26, 2012 8:28PM
Retire at 80?! How friggin ludicrous. Part of the Repugnicant plan, no doubt. That and the Repugnicant health plan for seniors-D.I.E.
Meanwhile, the looting of the country by the 1% continues unabated.

Nov 17, 2012 10:46PM
I'm a retired financial planner and I must say that the previous generation had a better chance at retiring comfortably at an earlier age. I had many clients that retired with the three legged stool...a company defined benefit plan, social security and a personal plan such as a 401K. For many of today's workforce there is no company defined benefit plan. Social security will undergo changes and many cannot adequately fund their 401K to make up for the lack of the DBP. It's sad, I feel for my kids and others who will struggle to retire with dignity at a reasonable age.
Nov 17, 2012 9:28PM
Retirement at 80? How Redicules! Half the people don't even live that long,The ones I knew barely made it to 70,I plan on Retiring at 60 because i'd like to live long enough to enjoy it !
Nov 18, 2012 3:49AM
Retire successfully. Save 20% of your income for fortyfive years. Die in your 66th year.
Oct 26, 2012 2:00PM
Retirement at 80?  I'm still working, past 80!  Keeps me young and -- besides - with today's economy it's better to keep on plugging as long as possible.  I think the day is coming when it will take an average 2 years present day salary to buy one loaf of bread in the future.  With all the countries running off limitless currencies on their printing presses the only hard currencies will be gold and silver and maybe a well preserved loaf of bread.
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