Retirement insecurity

Most people look forward to retiring, but a stark reality of retirement is that retirees must rely on income from sources other than working. This means income from Social Security, private pensions, or other retirement funds. N.C. State University economist Mike Walden describes a study that looks at how adequate will these be for future retirees.

“Now at first I should say that in in deciding whether you’re going to be O.K. in retirement financially, there are a whole host of economic assumptions you have to make about inflation, about how much you’re going to spend in retirement, about your lifespan. So … before you look at the results of any study, you have to look at those assumptions.

“But based on the assumptions of this new study, what it found is about half of retirees are coming up in the future are going to have adequate retirement income. And about half won’t.

“Now they break this down even further. What they find is that early baby boomers — that is baby boomers that were born let’s say between 1946 and 1956 — are actually the best-prepared.
Late baby boomers are not as well prepared, and Gen Xers are even less prepared. Also the percentage of people who have adequate retirement income goes up with income as you might expect, and it goes up with the number of years that you have left to work.

“But the bottom line here is that I would say once you get to about age 50, you should really start thinking about retirement planning in earnest and try to do some number crunching. Work with an expert to see what kind of income you will actually have and can count on once you stop working.”