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Can You Afford to Retire?

Core Facts

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Monday, December 10, 2018

When it comes to saving for retirement, it’s every man or woman for themselves. Very few companies today provide a pension.

Unfortunately, not everyone is able to afford to save as much as they would like to, and this is creating a gap between those who can afford to retire and those who can’t. The Employee Benefit Research Institute estimates that Americans have $4.3 trillion less than they should have for retirement.

It’s not just a shortfall on savings that is the problem - almost 40 million households have no retirement savings. Many people are relying on their monthly Social Security benefit to get them through their retirement. It will help, but if you have no savings, it won’t be enough.

Let’s look at the numbers. The highest allowable benefit you can receive is only available to those who had the maximum taxable earnings for a minimum of 35 working years. So while some may get a higher amount of $2,788 a month, the estimated average monthly benefit is $1,404. That means that most people retiring from work are only able to receive just under $17,000 for the year. That is not enough to survive on unless you are incredibly frugal.

According to data from the Bureau of Labor Statistics, households run by someone 65 and older spend an average of $45,756 per year. That works out to $3,813 every month. So even if you were getting the maximum Social Security available to anyone, you would still not be able to afford to retire without savings.

How can you calculate what you actually need to retire? The first step is to establish what you will need. Decide where you want to live and what kind of home you’ll be comfortable in. Then add an estimate of all the expenses you will have to cover.

Do some research and use a retirement calculator to help you. Some expenses may be higher than you originally anticipated. One example is healthcare. The latest 2018 Retirement Confidence Survey reports that 44 percent of retirees found healthcare expenses in retirement were somewhat higher or much higher than expected.

On top of that, people are living longer than ever. The Social Security Administration says that about a quarter of the folks who are 65 today will live past age 90. Ten percent of those same people will live past age 95. That’s a long time to fund a retirement.

Talk to your investment advisor and devise a plan, so you can retire without financial stress.



Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Lawrenceville, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 800-367-3000 Visit our website: www.davidlerner.com

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