If you’re keeping on top of your retirement savings strategy, you likely have a specific number in mind. However, a study conducted by TIAA found that retirement savers tend to have an unrealistic view of how much money it will take to retire comfortably. The survey found that few are paying attention or taking the necessary steps to reach a realistic retirement goal.
Diane Garnick, chief income strategist at TIAA, emphasizes that planning for all of the details that could arise during retirement is a must. “While savings is a crucial element of retirement planning, it’s important to plan ahead in order to generate reliable monthly income that will cover expenses incurred in retirement. Individuals need to carefully consider what their expenses will be in retirement and make a plan to generate reliable monthly income to cover those expenses. If you’re unsure, consider meeting with a financial adviser who can work with you to determine the most suitable plan for your specific needs,” Garnick said.
Why retirement expectations aren’t lining up with reality
Poor planning may be the reason some savers are not prepared for retirement. Garnick said this has become even more evident as people are living longer lives. “As people live longer and spend more years in retirement, individuals face a greater risk of outliving their retirement savings without careful planning. Americans feel confident in their ability to generate income during retirement, but are not taking the necessary steps to plan ahead. More than half of American adults feel confident that they can successfully turn their retirement savings into income after they stop working, but fewer than half (46%) even know how much they have saved in their retirement savings accounts,” said Garnick.
Some don’t know how much they have saved. Fewer than half of American adults have an idea of how much they have in their retirement accounts and just 35% know how much income they will have each month during retirement.
Most want lifetime income. When given a choice among different perks respondents could have during their lifetime, 68% said they would first choose a retirement paycheck that lasts as long as they live. They would choose this option over unlimited lifetime airline tickets (9%) or a new car every year for the rest of their lives (9%).
Few are doing what it takes to get income for life. Just 43% of survey respondents said they were willing to set aside a portion of their retirement savings for a choice that would give them the ability to receive a monthly paycheck for life.
What you can do
If you think you may be off track with your retirement savings, don’t panic. You can’t get the lost time back, but you can do a few things to catch up. Take advantage of the many retirement tools that are available both on and offline. You can start with a retirement calculator such as the T. Rowe Price retirement income calculator or one of the retirement tools featured on AARP.org. In addition, you can also make catch-up contributions to retirement accounts such as a 401(k), 401(b), or 457(b) plan.
Follow Sheiresa on Facebook.