Study: 43% won't have enough in retirement (CNNMoney.com)

[eppur_se_muova]

By Jeanne Sahadi, CNNMoney.com senior writer
June 6, 2006: 11:15 AM EDT

NEW YORK (CNNMoney.com) – A new retirement risk index released Tuesday estimates that 43 percent of working-age households are not likely to have enough retirement income to replicate their current standard of living.

The Center for Retirement Research (CRR) at Boston College created the index and defines "at risk" to mean those households projected to fall at least 10 percent short of their income target in retirement.

The organization assumed a base target of 73 percent of one's pre-retirement income for all households. In other words, a household with $100,000 in annual income before retirement should be able to generate $73,000 from all sources, including savings, Social Security and pensions. Targets, however, vary according to marital status, gender and income.
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Lastly, they assumed retirees would annuitize savings, and tap their housing wealth through a reverse mortgage. Neither practice is common, but the CRR made the assumptions since both are ways to maximize how far one's resources can stretch.

CRR researchers did not, however, factor in the costs of a potential health care crisis for two reasons: the increase in healthcare costs is hard to predict and only a percentage of households will experience a catastrophic health situation that will throw off finances considerably.
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more: http://money.cnn.com/2006/06/06/retirement/risk_index/index.htm?cnn=yes

To summarize those last two paragraphs: These are the most optimistic assumptions possible, so 43% is likely to be too low an estimate.

[htuttle]

1. No problem. I gotta plan

I'm either going to retire in Bermuda, or get free room and board at a state-funded institution.

[NMDemDist2]

2. 43% seems like a lot. most folks I know aren't anywhere close to

ready for retirement

[yourout]

3. Count me in........

:(

[Erika]

4. Most studies show 2/3 of boomers will have only SS for

retirement. We're in trouble.

[Arkansas Granny]

5. I would be one of those 43 percenters.

[roguevalley]

6. I have a state pension that pays me enough. I also have a tax

deferred annuity for later on. I would suggest, my sweeties, that you go and get a tax deferred annuity and start putting away the same amount each month, even if its only $25. It is taken from your account before taxes and the amount you are taxed is what's left. You save and it grows -if you are hoping for a retirement amount, chose a nice diversified conservative plan with an agent. IF you are a risk taker, you might make more but you also risk losing more. When you retire, it will be there, all of it grown and when you withdraw it, you do so at a lower tax level due to age. You must do something like this. An old teacher got me to do this and I still thank her. You are NEVER too young or poor to do this.