What’s Your Number For Retirement Savings?

By Shelly Scriba

How Much Does Retirement Cost?

You know the one.  It is the magic number that we need to have saved in order to retire comfortably and not be a burden on our children before we die. We have all read the articles and heard the expert’s advice that a comfortable retirement requires million dollar portfolios.  The numbers are so fuzzy and so high that many Boomers feel hopeless.  How can they ever get where they need to be?

The good news is that maybe your real number isn’t quite so high.  Georgia State University participated in a 2008 study that found men needed to save 4 to 6.8 times their annual salaries from the years just before retirement.  For women, 4.5 to 7.5 times earnings would provide a comfortable retirement according to the study.  Use your “close to retirement” income to figure out what your number is.  You can see where you have to go and construct a plan to get there.   

The Employee Benefit Research Institute reports that the average amount in a 401k account for a 50-year-old is just under $125,000.   If you are 50 or so, earning around $50,000, and have a similar amount already saved, you could reach your number by working and contributing the maximum each year until reaching your “normal retirement age”.  If you are earning more each year and wish to maintain your current life style in retirement, your number will be higher – but your ability to save is likely higher too.

But there are dark clouds on the horizon for many Baby Boomers who have lost their jobs and who are finding it difficult to get another.  The Urban Institute reports that a job layoff in one’s 50′s or 60′s reduces family wealth (not income) by 21% for couples, and 33% for single people.  Do the math and you will see how badly long term unemployment impacts Baby Boomers and their ability to retire.  Unfortunately, Boomers make up the largest segment of today’s long term unemployed.  This will likely reduce their wealth for years to come.  Those close to retirement may never recover.

It isn’t just the lost wages during unemployed that diminishes our accumulated wealth.   It’s also the loss of savings and the future earnings on those savings as we draw upon our resources to pay bills and buy necessities.  It’s also the loss of current and future earnings as opportunities diminish and wages drop.  And it’s also the loss from prematurely sold assets (homes, insurance policies, stocks, etc.) as we scramble to make ends meet.

So what are Boomers to do when no one will hire them, when no one will pay them the salary they once were getting?  They will reinvent themselves to create new opportunities.  They must because this is the new normal and Boomers need to accept it, get over it, get back to work, and earn some money.  

So how does a Boomer create income in an unwelcoming job market and a skittish economy?  Employers have work that needs to be done but are loath to take on too many costs.  Experienced and knowledgeable Boomers can offer their services as consultants to help employers meet their needs without the long-term obligations of a permanent position.   Boomers can offer to work on projects on a contract basis.  They can take temporary positions to keep their skills up-to-date.  Any of these could ultimately lead to a permanent position.  Or Boomers can start a business.  Record numbers already have and many more will likely soon become entrepreneurs.

Boomers might not be able to replace what they lost, but they can reduce the strain upon their wealth and bring in much needed resources to help stem the massive losses to their nest eggs.  The sooner they do something, the brighter their futures will look.

Shelly Scribe writes for www.myboomer2boomer.com, an information and resource site designed to help Baby Boomers find and support Boomer Entrepreneurs and other Boomer Friendly businesses, employers and products.  

Related posts:

1. CD vs. Fixed Annuity For Retirement Savings
2. Cut Bills for More Retirement Savings
3. Support Baby Boomer Entrepreneurs
4. Will Boomers Ever Retire?
5. What is a Baby Boomer?

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