Retirement savings crisis
Fidelity: Many will need $2,100-a-month more in golden years
The typical U.S. worker faces as much as a $2,100-a-month shortfall during retirement if current trends continue, a new study from Boston’s Fidelity Investments predicts.
“What we’re trying to do is help the individual get a better sense of what (future) they’re tracking toward,” Fidelity Senior Vice President Chris McDermott told the Herald.
The nation’s largest 401(k) and individual retirement account provider, Fidelity yesterday released a glum “Retirement Savings Assessment” based on an analysis of investors’ current finances.
The firm polled 2,800 people age 25 to 85 about expenses and savings, then factored in things like future inflation to project how much money people will have — and need — in retirement.
The conclusion: The typical baby boomer (those born between 1946 and 1964) will come up $2,100-a-month short once they retire.
Gen Y- and Gen X-ers, or Americans born between 1965 and 1991, will fare only slightly better. They’ll fall about $1,700-a-month short on post-retirement bills.
McDermott attributes much of the problem to Wall Street’s 2008 collapse, which left many Americans too cautious about their retirement savings.
Fidelity found some 40 percent of pre-retirees have 20 percent or less of savings in stocks, even though equities historically offer the best long-term returns.
“Across almost every age group, we found individuals were invested too conservatively relative to the amount of time they had until retirement,” McDermott said.
Two-thirds of respondents planned to fill their savings gap by working at least part-time during retirement, but McDermott said that seems unrealistic.
That’s because only some 12 percent of those surveyed who’ve already retired said they had post-retirement jobs.
The poll’s only real bright spot: Respondents who haven’t yet retired typically underestimated how much Social Security they’ll get by $450 a month.
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