Tag Archives: Schwab Pomerantz

Wealthy Workers Are Seriously Underestimating Their Retirement Needs

By Business Insider

Wealthy Workers underestimate

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(Alamy)

By MANDI WOODRUFF

A lot of wealthy workers could be missing a vital flaw in their plans for retirement, a new survey shows.

More than 80 percent of workers earning $115,000 say they are prepared for retirement — but they think they’ll only need $66,000 per year to live on, Charles Schwab (SCHW) found.

Sure, it’s possible to survive on $66,000 a year — plenty of people would be glad to earn half that much in a year — but chances are high-earners won’t be prepared for that kind of lifestyle change, let alone unexpected costs that could come up down the road.

Most experts agree consumers should plan on at least saving enough of a nest egg to maintain their current lifestyle in retirement. Otherwise, the only answer is to find ways to minimize costs and trim household budgets.

That starts with figuring out what age you plan to retire, and these days, workers are planning on working well past the typical 65th-birthday benchmark.

Couple that with the fact that we’re living longer than ever as well, and retirees could wind up spending 15 to 20 years living off just their nest egg alone.

The biggest hurdle retirees will almost certainly face is the rising cost of health care.

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“Even with Medicare benefits, a 65-year-old couple could need nearly $400,000 to cover out-of-pocket health care costs during retirement, according to research by the Employee Benefit Research Institute,” noted Carrie Schwab-Pomerantz, Charles Schwab senior vice president. “The bottom line for everyone is that health care costs need to be carefully factored into retirement plans.”

No one can predict whether they’ll need long-term medical care in the future, but there are steps people should take now to mitigate those issues as early as possible.

First, review your retirement goals with your spouse or partner and think about running it over with a financial advisor. Fee-only financial planners have a fiduciary duty to work in the best interest of clients, and you won’t have to worry about commissions or other hidden fees that could sneak up on you.

Just half of Americans said they’re saving through a retirement plan like a 401(k) or IRA, according to a recent survey by the EBRI. While not everyone might be able to max out a retirement plan contribution each year, even contributing a small portion of each paycheck to a retirement account could be a big difference in the long run.

“Especially for those looking to catch up on savings, we recommend maximizing contributions in a 401(k) at least up to the employer match, considering other tax-advantaged retirement accounts such as an IRA, and finding ways to automate savings,” Schwab-Pomerantz says.

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Source: FULL ARTICLE at DailyFinance

Affluent Americans May Be Underestimating Their Needs in Retirement Says New Schwab Survey

By Business Wirevia The Motley Fool

Filed under:

Affluent Americans May Be Underestimating Their Needs in Retirement Says New Schwab Survey

SAN FRANCISCO–(BUSINESS WIRE)– Despite a general sense of confidence in their financial readiness for retirement, affluent Americans might be overlooking critical tenets of retirement planning, according to a new Schwab survey of approximately 1,800 investors across nine major U.S. markets. More than eight in 10 (84 percent) investors say they have a retirement plan in place, and 80 percent of these respondents say they are confident about their financial readiness for retirement.

However, when it comes to estimating how much money they’ll need once they actually retire, respondents say they’ll need on average around $66,000 in income annually, far lower than their current average income that is approximately $115,000.

“Everyone’s retirement saving and investing plan is going to be unique, but each plan needs to start with a realistic assessment of personal situation and goals,” says Carrie Schwab-Pomerantz, Charles Schwab & Co., Inc. senior vice president, CFP®. “In many cases, we tell clients to assume they’ll need roughly the same annual income in retirement as they had beforehand unless they anticipate a significant lifestyle change, and to take into account longevity risk when planning how much money they might need.”

The survey also finds that, on average, respondents plan to work until they are 67 years old and expect to live to the age of 86, suggesting that they anticipate living off their retirement savings for less than 20 years. When asked directly how many years they anticipate living off of their savings in retirement, people say 21 years, on average.

Retirement Confidence High

Although there appears to be room for improvement in how realistically people are planning for their financial needs in retirement, the story isn’t all bad. Thirty-three percent of people feel they are completely prepared for retirement, and another 51 percent feel at least moderately prepared.

Schwab-Pomerantz notes that even people who have a financial plan in place would be well-served to give it a second look to ensure they are on track to meet their retirement goals. “Especially for those looking to catch up on savings, we recommend maximizing contributions in a 401(k) at least up to the employer match, considering other tax-advantaged retirement accounts such as an IRA, and finding ways to automate savings,” she says. “We’re also having retirement planning discussions with an increasing number of clients who want to be more engaged in …read more
Source: FULL ARTICLE at DailyFinance