In all the excitement leading up to Halloween, I very nearly forgot about another national event. The week of October 16-22 is National Save For Retirement Week. Five years ago Congress designated this week in order to encourage Americans to think about what financial needs they may have when they retire.
And the results of the 2011 Retirement Confidence Survey is an indication we aren’t spending nearly enough time thinking about our retirement needs.
While 59% of those surveyed said they are now saving for retirement, 56% said they had less than $25,000 in savings and investments (not counting the value of their home or pension plan). Almost half (45%) said they are not very confident that they will be able to save as much money as they anticipate they will need for retirement.
And 42% said they determined how much they would need for retirement by guessing!
How smart are you when it comes to understanding issues related to retirement? Here are just a few of the questions asked in this year’s MetLife Retirement Income Quiz. See how many you get correct.
- What percent of pre-retirement income do experts think retirees need to use as a benchmark for determining the amount of annual income needed in retirement to maintain their living standard?
A- 20-30%
B- 40-50%
C- 80-90%
D- 90-100% - To help ensure than an individual has enough money to make savings last his or her lifetime, experts are now recommending limiting the percent they withdraw from their savings each year to:
A- 1-3%
B- 4-6%
C- 7-10%
D- 11-15%
- expenses for long-term care (e.g., nursing home care, assisted living) are generally covered by:
A- Health insurance
B- Medicare
C- Disability insurance
D- None of the above
- How much more will a person’s monthly benefit be if they delay their Social Security benefits from age 66 to age 69?
A- 0%
B- 3%
C- 15%
D- 24% - What is the greatest financial risk facing retirees?
A- Inflation
B- Longevity
C- Investment
D- Interest rate
What can you do to better prepare for your retirement needs?
First, determine how much you think you will need in retirement. Define your planned lifestyle (travel, hobbies, part-time work) and how much you expect to spend each year.
Second, identify all sources of income; 401-K, IRA, pension, investments, Social Security.
Calculate the difference in what you will need, and how much money you think you will have coming in each year.
Close the gap. If you think you’re short, consider adjusting your saving and investment strategy. Increase the contribution to your 401-K. Spend less now.
Finally, keep an eye on your money. Periodically review your portfolio to see how you’re doing.
At Third Wind, we help people plan for a successful retirement, financially, physically and emotionally.
By the way – here are the answers to those questions: 1= C (80-90%), 2=B (4-6%), 3=D (None of the above), 4=D (24%), 5=B (longevity – we’re living longer and we’ll need more money).
How is your retirement IQ?
*** Bill Ronay is President of Third Wind, a retirement resource network that provides personalized, comprehensive information, guidance and resources to help people make a successful transition into retirement. Third Wind uses a holistic approach to help adults facing retirement discover new opportunities and purpose as they make the transition into the third phase of life; their Third Wind.
If you have questions about planning your retirement, contact Bill at 502 895-3693 or go to mythirdwind.com for more information.
