You know the drill. Work until you’re 65 or so, then pull up stakes and buy a home somewhere warm and sunny. Work on your golf game, travel a bit and enjoy your golden years as nature intended.
But is that a realistic goal these days?
A study from Charles Schwab says “maybe not.”
That study suggests Americans are “underestimating” their financial needs in retirement, even as most U.S. adults say they are prepared for calling it a career.
The Schwab study of 1,800 U.S. investors says 84% of them say they “have a retirement plan in place” and 80% say they are “confident” of their ability to retire comfortably.
But Americans aren’t aiming high enough on their retirement income, Schwab says. The report notes that study participants say they’ll need $66,000 in annual income in retirement, way below their current annual income of $115,000.
Most financial advisers want their clients to have at least 75% of their annual income in retirement, which means the Schwab study participants won’t have enough cash to retire in reasonable comfort.
By and large, U.S. workers estimate they’ll retire at age 67 and will live until age 86 — meaning they’ll need 21 years of savings in retirement. But only having roughly 60% of their annual income to live on after age 67 won’t cut it, Schwab suggests.