Unwritten rules guide us throughout our lives, from infancy to old age. As far as retirement income goes, most experts have agreed for years that replacing 70% of your pre-retirement income should be the minimum benchmark you use to support your standard of living when you are done working.
However, according to the financial gurus at Goldman Sachs, 75% of retirees fail to accrue the amount of savings required to maintain a preferred lifestyle in retirement.
The Goldman Sachs Retirement Survey & Insights Report 2022 highlighted the difficulty retirees have with generating enough income to live comfortably. Just over half of those surveyed (51%) are settling with less than 50% of their pre-retirement income — and over 40% of respondents claim their savings are lagging, and they they will have to play catch-up to get to their preferred retirement income.
Among those still working, baby boomers were most likely (53%) to say they are behind in their combined savings, followed by 51% of Gen X-ers, 34% of millennials and 27% of Gen Z respondents.
Retirees-to-Be Remain Anxious About the Future
While retirement is thought of as a time for relaxation and enjoying your remaining years in comfort, retirement planning can be an anxiety-inducing endeavor. Although 95% of working individuals feel that financial help is important in preparing for retirement, 56% prefer to manage their own incomes.
Not surprisingly, there are a number of factors influencing current or future retirees’ concerns around generating income. The study found that retirees were most fearful of rising inflation (71%), future healthcare needs (51%) and potential reductions in Social Security (46%). Working individuals were most concerned with having enough savings (51%), inflation (49%) and leaving their steady paycheck behind (43%).
If you feel you won’t have enough income upon retiring — and are feeling overwhelmed with managing financial priorities — there are a few measures you can take to help rectify your financial situation and alleviate your fears.
The top three actions taken by respondents in the Goldman Sachs study were reducing spending, implementing a more conservative investment strategy and dipping into an emergency savings fund. However, CNBC suggested the following steps you might take to increase your retirement income:
- Re-evaluate your lifestyle now and look for ways to cut spending.
- Try to set aside a bit more of your salary toward savings, even if money is tight.
- If you don’t have access to a 401(k) workplace retirement savings plan, consider contributing to a pre-tax or post-tax individual retirement account (IRA) or Roth IRA.
- Keep your money invested instead of trying to play (or time) the market.
- Postpone taking Social Security benefits even if the cost-of-living adjustment (COLA) is high.
- Think about buying an immediate or deferred annuity, depending on your retirement expectations and strategy.
- Keep on working and continue to make and save more money.
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