By Mary Johnson
Think you’ve got enough to live on in retirement? A study by
Hewitt Associates found that seniors need almost 16 times their final annual pay
in retirement savings and resources to maintain their current standard of living
during retirement. That means a person nearing retirement with an income of
$45,000 in 2011 would need $720,000 in retirement accounts and other resources
in addition to Social Security. The study expects Social Security to supply a
little more than one-third of retirement income.
But the reality is that the majority of retirees today rely on
Social Security for at least one-half of their retirement income. And with
monthly benefits averaging about $13,200 a year, few seniors are adequately
prepared for retirement — even those who plan and save carefully. And who could
have foreseen the impact of extreme events like our recent financial crisis —
big declines of housing prices, the drop in the stock market occurring at the
same time a person nearing retirement lost his or her job?
Today, it’s just as important to keep saving, and earning, even
when you’ve stopped working full-time or left your old job. We’re living
longer. We will need more retirement resources. At the same time, costs,
particularly for healthcare, housing and energy, are rising several times faster
than Social Security benefits.
In addition, the future of our promised Social Security and
Medicare benefits isn’t certain. Real financial challenges lay ahead for Social
Security, Medicare, and our economy. Changes that will affect our benefits and
the taxes we pay are already in the works. Creating a financial game plan now
will help navigate stormy days ahead. Having a plan will help manage your
fears, as well as your money.