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When the retirement plan works

By Jennie L. Phipps ·
Monday, January 31, 2011
Posted: 4 pm ET

Retirement looks pretty good from the perspective of people who have managed to save a little bit of money.

Investment advising company Merrill Lynch surveyed 1,000 baby boomers, ages 46 to 64, who had more than $250,000 in assets they were free to invest. While $250,000 won't put you in the millionaire's club, it will offer a little retirement breathing room.

What will $250,000 buy you these days? According to Bankrate's retirement income calculator, if you can find safe investments averaging 2.75 percent and you stick to the 4 percent withdrawal rule, you can expect to earn $880 a month for at least 30 years. If you buy a single life immediate annuity, you'll make $1,586 a month, according to

That kind of return is enough that 72 percent of the people who responded to the survey said they believe they are going to enjoy a higher standard of living during retirement than their parents did.

These reasonably well-off boomers offered the following advice to 30-year-olds who are trying to get their retirement planning ducks in a row.

  • Develop a clear vision for how you want to live during your retirement years (48 percent offered this advice).
  • Study up on how to manage retirement income (52 percent said this was more important than they had previously thought).
  • Start saving no later than your 30s (78 percent recommended this, while 57 percent advise beginning to save when you're in your 20s).
  • Get expert help with retirement planning (more than 34 percent said this was their No. 1 piece of advice).

For some of those surveyed, retirement planning hasn't gone nearly as smoothly, with 27 percent saying they had postponed their retirements for a variety of reasons, none of them very surprising.

  • The recession reduced their nest egg (34 percent reported this).
  • Their adult children needed more financial support than they had previously anticipated (23 percent reported this).
  • They didn't realize how much money it would take to live in retirement (21 percent reported this).
  • They didn't save enough (18 percent reported this).
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