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Don’t be shamed; be motivated

By Barbara Whelehan ·
Friday, November 18, 2011
Posted: 5 pm ET

The financial industry seems bent on shaming Americans about their retirement readiness -- or lack thereof. About a half-dozen new retirement surveys were released this week alone. Fellow retirement blogger Jennie Phipps wrote about one by Ameriprise Financial yesterday and another by Wells Fargo on Wednesday, the latter of which revealed that a quarter of Americans with household incomes of $100,000 or less expect to work until age 80.

That would help them avoid the most difficult retirement planning aspect of all -- which is to generate income from our retirement accounts when we finally do quit our jobs for good. A new survey by Charles Schwab suggests that Americans suffer feelings of inadequacy on this rather complex financial task before them.

It's no wonder. Without a doubt, it will be a lot more challenging than simply deferring a percentage of our earnings into a 401(k) plan and allocating the money into different funds. How we set up the distribution phase will make a difference in how long our savings will last.

Some highlights from the study, which focused on people who work, have investable assets of $100,000 or more, are 55 to 70 years old and within five years of retirement:

  • 52 percent of respondents define retirement as not working at all; 34 percent say it's about working part-time; and 14 percent say there's no such thing as retirement.
  • 50 percent expect their expenses to decrease during retirement; 31 percent say they'll stay the same; and 18 percent predict expenses will increase.
  • 52 percent have worked with a professional financial adviser to create a retirement income plan, while 48 percent have not. (That is the whole point of these surveys, right? To get us to work with a professional, preferably one from the sponsoring firm.)
  • One-third of respondents have not determined how much their essential expenses will be on a monthly or annual basis. But the flip side is that two-thirds of respondents have taken this step.

The study is chock-full of data. But it serves a good purpose, in my opinion, which is to motivate us to begin figuring out our retirement needs if we haven't begun doing so. Bankrate has published several stories recently about managing income in retirement. Check out this typical couple's retirement income plan as well as how to generate income from a $500,000 portfolio.

Once you've figured out your retirement income needs, if you need help, get yourself some expert advice. Just make sure you don't overpay for the services.


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