Americans struggling to turn retirement savings into income
You may love pets, but you can’t work forever. Have you prepared for the future? New research from J.P. Morgan shows that 401(k) participants are wrestling with how to make their savings last through retirement. Eighty-six percent of respondents said that they’ll need to know how much of their pre-retirement salary they can replace, yet almost one quarter (22 percent) aren’t sure what they’re on track to receive after they stop working. Overall, only 40 percent of respondents even feel comfortable that they’ll be able to reach their financial goals in retirement.
The research also shows Americans are underestimating how much money they’ll need in retirement. Among respondents who had a target retirement income replacement level in mind, 45 percent thought they’d need less than 75 percent of their pre-retirement salary level. However, experts agree that a minimum guideline for successful retirement income is a replacement ratio of at least 70 percent or more.
Here’s more about the retirement challenges Americans face:
> Two thirds of respondents admitted they don’t know how much they should be saving for retirement.
> Nearly 50 percent of respondents are scared they’ll outlive their retirement savings.
> Of the participants who said they’d need 75 percent to 100 percent of their pre-retirement salary after they stop working, less than a third even had enough savings to provide this income.
To make matters more difficult, driven by the recession, most Americans have pushed aside retirement savings priorities, which rank a distant second to paying monthly bills. This is despite the fact that 401(k)s are the only or the primary source of retirement savings for two thirds of Americans.
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