A recent opinion piece in the NYT by Teresa Ghilarducci, professor of economics at the New School for Social Research, asserts most Americans who are approaching retirement are completely unprepared for it. Says Ghilarducci
Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. The specter of downward mobility in retirement is a looming reality for both middle- and higher-income workers. Almost half of middle-class workers, 49 percent, will be poor or near poor in retirement, living on a food budget of about $5 a day.
There are many, many people who are flailing toward retirement. With IRAs and annuities gutted just to put food on the table now, many will feel the need to work long past planned retirement just to break even later.
Does Ghilarducci offer a solution? Indeed she does:
First, figure out when you and your spouse will be laid off or be too sick to work. Second, figure out when you will die. Third, understand that you need to save 7 percent of every dollar you earn. (Didn’t start doing that when you were 25 and you are 55 now? Just save 30 percent of every dollar.) Fourth, earn at least 3 percent above inflation on your investments, every year. (Easy. Just find the best funds for the lowest price and have them optimally allocated.) Fifth, do not withdraw any funds when you lose your job, have a health problem, get divorced, buy a house or send a kid to college. Sixth, time your retirement account withdrawals so the last cent is spent the day you die.
Is it just me, or does this sound like it will not be so easy if a person is already at the age of 50? Saving 30% of every dollar for retirement?
Should be easy to lose weight since we will not have any money for groceries…
