How much savings do you need for the future and reap the benefits of thrift when you retire? Do you really know? Apparently, there is a huge number of Americans who are not attuned to what is the appropriate amount to save.
According to the 2011 Retirement Confidence Survey that was conducted by the Employee Benefit Research Institute in Washington, DC, a majority of workers have not tried to do a calculation. The result: lack of on the part of workers of an awareness of how much savings they need for retirement.
The survey shows that less than half of workers, which constitute 42% of those surveyed, report that spouses have tried to calculate the amount of money they will need to have saved by the time they retire to live comfortably. This attitude towards savings has not changed since 2003.
What happens, instead, is that many workers simply guess how much they will need to accumulate as they prepare for retirement. The survey shows 42% of workers reported they guessed the amount they need to save, while 11% of those surveyed said they have done some calculation.
In terms of saving goals among workers, 31% said they need to save less than US$250,000 for retirement and another 19% mentioned a goal of US$250,000 – US$499,999. There is also 22% of workers think they should save US$500,000 – US$999,999, while 1 in 10 of those surveyed believes they need to save US$1 million – US$1.49 (7%) million or US$1.5 million or more (10%).
However, prudence is still exhibited by some. Among the workers, 21% report that they have consulted a financial advisor and doing their own estimate. The others, 9%, say they read or hear how much is needed while 7% say they use an online calculator. Those who base their estimate on their current expenses or lifestyle constitute 5% of those surveyed, while those who regularly fill out a worksheet or form are at 5% also.
Not surprisingly, workers who have done a retirement savings needs calculation tend to have higher savings goals than workers who have not.
Among those who have done a calculation, 25% estimate they need to accumulate at least $1 million for retirement; that compares with just 10 % of those who have not. At the other extreme, 24% of those who have done a calculation (compared with 36% who have not) think they need to save less than $250,000 for retirement.