As is the case with other annuity benefits realized from an insurance policy, an annuity in this case – again purchased from an insurance company - can be designed to stretch your savings over your lifetime and even possibly allow you to enhance your lifestyle. The Harris Poll results reveal a lack of understanding and awareness of options available to access one’s retirement savings, including lump sum payouts (with only 24% of those polled “very familiar” with this option), routine quarterly or monthly payments (only 29% very familiar), annuities for themselves (only 23% very familiar), or an annuity for themselves for life and the life of their beneficiaries, (only 17% very familiar) - with one in four people not even aware that this option exists.Īs you may have guessed, annuities can be at least part of a solution. How will you actually receive your money from your retirement plan? At what age will you retire, how much do you think you need to live on each month and how can you make sure you don’t run out of money and outlive your savings – even without reaching that “magic number”? Our survey confirms that people need to learn about their options and possible strategies to maximize what they have saved. As a result, we must then shift some of the focus from simply “save early, save often” to helping educate people on what to do with their savings when they retire.
#RETIREMENT MAGIC NUMBER HOW TO#
While the retirement industry has spent the last 20 years advising people how to accumulate retirement savings and reach a “magic number” – in this case $3,200-5,000 per month – many may not ever be able to reach that goal, even with a prudent approach to investing in a properly diversified 401(k) plan. Even a $1 million nest egg, will generate approximately $40,000 per annum … leaving a pretty thin $1,600 buffer. In short, in order to generate $38,400 per annum (i.e., $3,200 per month) that people believe they need to retire, on would need a portfolio worth approximately $800,000 – a figure that many will not have when they enter retirement. The Harris survey reports those who plan to retire (on average at the age of 66, per our survey) believe that they will need approximately $3,200 per month to achieve that goal, while nearly one in five say they will need at least $5,000.īased on an average household income of $52,000, these figures may seem realistic at first glance, but many people do not consider the additional expenses they may face in their golden years, including cost of living increases and the cost of health insurance – as well as the fact that, as they age, medical issues above and beyond what they face today may well arise.
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The first of these revolves around the fact that many people have underestimated just how much money they will need to save for a comfortable retirement. The results from Pentegra’s latest survey conducted by Harris Poll reveals a number of surprising findings, three of which I would like to examine in closer detail in three separate blog posts. A blog by Richard Rausser, CPC, QPA, QKA, Senior Vice President, Pentegra Retirement Services – June 12, 2015