If you're a baby boomer, your retirement plans have changed. So says the current BusinessWeek cover story. Author Chris Farrell says the hit that your 401k and other investments have likely taken in the last year means you'll be working longer. He demonstrates the impact of an incredibly shrinking nest egg with figures provided by economist Robert Shackleton of the Congressional Budget Office: Assume a married couple is in their early 60s earning $100,000 pretax a year. They need nearly $66,000 a year after taxes to replace 80% of their preretirement income, the standard guideline for retirement income.
If both retire at age 62, they'll receive more than $25,000 in total Social Security benefits and require a portfolio of at least $891,000 to generate the income they need, assuming normal life expectancy. But if the couple waits until age 66 to retire, their Social Security benefits go up, they have more years to feed their portfolio, and fewer years to rely on its earnings, so they need only $552,000 socked away. If they retire at age 70, they need only $263,000.
Anecdotally, I know a couple in their early 60s who were looking forward to retirement in the spring of 2008, nearly a year ago. The economy had gotten so shaky, though, that they decided to hang on a bit longer. That was before the Wall Street meltdown last fall claimed a piece of their savings. They're both still working and have adopted a wait-and-see attitude.
The silver linings? For most people, working keeps the mind sharp and provides a built-in social network. Read the full BusinessWeek story.
2 comments:
I attended a workshop this week on Seniors and was startled at many of the statistics I heard. The presentor said that 11,000 people turn 50 every day in America. And the other statistic that scared me was this...75% of the professional staff in my field (I'm a librarian), are going to retire in 10 years or less. Who is going to take over our jobs? This country is maxed out in more ways then one.
Hmmm...will libraries of the future be "self-service"? I don't like to picture that. After the books, the best thing about libraries has always been the nice people who work in them.
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