Retirement Income Shortfall And The Middle Class
An average worker from the middle class is bound to suffer a retirement income shortfall after quitting the workforce
. This is mainly because he or she has only been able to save 7% or less of his or her projected nest egg, and will probably have to work well into retirement to make up for the deficit. Overall, workers from the middle-class bracket think that they will have to accumulate a minimum of $300,000 to live comfortably in retirement, and only have average savings of about $20,000, says a recently released Wells Fargo survey. The survey works with this definition of the older middle-class bracket: people ranging from 30-69 years of age, earning anywhere from $40,000-$100,000, and having investable assets worth $25,000-$100,000.
Retirement finances director Laurie Nordquist says that while many Americans are worried about not having enough to retire on, most workers have no idea what to do with their expected shortfall of retirement income. This, she says, will obligate many to downsize their retirement lifestyles just to get by.
The survey has also found that those with less time to go before retiring are still lacking in funds where participants from 50-69 years of age do not fare that much better than most respondents, with an average savings of less than $30,000 put aside to fund their golden years. More than 33% of all survey participants have faced up to the probability that they will need to work after normal retirement age simply to have enough to live on or be able to afford some luxuries. If these figures are not bad enough, most of the respondents are banking on their Social Security benefits to bridge the gap between retirement earnings and expected expenses, although some are not as confident despite their future dependence on it.
More than three-fourths of all respondents from 50-59 years of age do bank on their Social Security paychecks for a good part of their retirement funds, while less than a fourth of all thirty-something workers believe their benefits are sizeable enough to support them after they quit the workforce.
A major percentage of all respondents do know that they will not have enough to retire on if they do not cut back on their spending today, postpone retirement, and downsize their lifestyles when they finally retire; the sad thing is that they still need extra help in determining how much more money they need for retirement and how to choose investments for their 401Ks. Unexpectedly, more than 66% of all respondents from the middle class were not willing to for professional investment and financial advice to enable to help them avoid a retirement income shortfall.
by: Katherine Smith
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