Source: Coach Mahr
A recent study conducted by Escalent found that 40% of retirement plan participants were simply guessing when asked how much money they needed to have saved for their retirement goals. It seems that rather than putting time and effort into carefully planning for a successful transition from work life to a retirement life, they are simply guessing at how much money they will need to accumulate to retire comfortably and hoping for the best.
The survey asked 4,000 401(k) plan participants who actively contribute and have balances of at least $5000 in their accounts. To give us a little more hope, the survey did find that approximately 30% of the respondents used some sort of online savings calculator to create a plan to help guide their savings habits to help achieve their future goals.
When asked how much they believe they will need to save to be able to live comfortably in retirement, the average savings goal was $946,000. Younger employees were more likely to have guessed at $500,000 or less, while employees in the baby boom generation, heading toward retirement in the next few years, generally responded in the neighborhood of $1.2 million or more.
It also seems that the older the respondents were, the more confident they were that they would be able to meet their future retirement income goals. While nearly half of baby boomers were confident about meeting their retirement goals, only 10% of Gen Xers shared a similar level of confidence. Studies show that people in the Gen X and Millennial generations have been heavily influenced by the events since the turn of the millennium. These include the significant recessions, job losses, and stock market drops associated with the dot.com bubble and 9/11, the Great Recession, which coincided with the failure of AIG and Lehman Brothers, as well as the COVID-19 economic shutdowns.
As you would probably guess, the CFPs of Impel Wealth Management do not believe that hope is a strategy and a more intentional approach to planning for this significant life event makes much more sense. It often seems that people put way more time into planning a two-week vacation than they put into planning a retirement that may last 20 to 30 years.
Unfortunately, only 25% of respondents had a relationship with a trusted advisor, such as a Certified Financial Planner to help them understand and define their goals. The first and most important thing that you need to do when contemplating your retirement is to determine where you are now. If you don't know where you are, it is hard to create goals and action plans to get where you want to go. As a reminder, it is never too early or too late to start this process... we can always make progress towards a more successful tomorrow.
When building a customized retirement income plan, there are two main resource pillars that need to be examined. The first pillar isyour family's unique income resources, such as Social Security, government pensions, and even defined benefit pensions, for the lucky few who will still receive those.
The second pillar is the asset resources that you have worked so hard to save and accumulate during your working years. This would include personal savings, 401(k)s, IRAs, as well as stock and mutual fund investments just to name a few.
Building strategies that create more confidence as clients move towards a successful transition from work life to retirement life is complex. There are many variables that can be affected by job changes, economic and market volatility, health issues, and even changes in the tax law. Once your retirement income plan is created, it is important to update it on a regular basis to make sure you are still on course to get to your desired destination. If you are unsure where to start, check out Impel Wealth's Second Opinion Service on our website. A link to that page is included below.
Navigating these uncertain economic waters on your own can be lonely and dangerous. Enlisting the help of a trusted advisor can give you more confidence in your retirement journey. The CFPs Impel Wealth Management are here to help both you and your family members get to your desired retirement destination. We firmly believe that hope is not a strategy that leads to successful outcomes. We are here for you and your loved ones as we continue “Moving Life Forward”. Let us know how we can help.
© 2024 Jesse Hurst
The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
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