Entrepreneurs
and edited by Mark Miller, a journalist,
author and editor who is a nationally-
recognized expert on trends in retirement
and aging. The site’s focus is the
reinvention of traditional retirement–how
the baby boom generation is revising its
approach to careers, money and lifestyle
after age 50.
To Retirement Security
by: Mark Miller of
Retirement Revised
www.retirementrevised.com
The 50+ Job Market
By now, I hope you agree that working past traditional
retirement age is critical to improving your long-term
retirement security. Now for the real challenge: finding
work—or keeping it.
At best, the employment outlook for older workers is
mixed. Employers will say they value older workers’
experience, knowledge, and loyalty, and it’s clear that
veteran employees are prized in some fields. But it’s just
as clear that employment security is eroding for older
workers and that age discrimination is a major hurdle to
finding a job or staying employed.
Mark Miller
Visit www.thehardtimesretirement.com to buy Mark's book.
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ways to give back and stay active and
engaged during retirement.
By Shelly Scriba
You know the one. It is the magic number that we need to have saved in order to retire comfortably. We’ve read the articles
and heard the experts advise that a comfortable retirement requires a million dollar portfolio – or more.
The numbers are so big and the calculations required are so daunting that many Boomers feel hopeless. How can they ever
get where they need to be when they don't know for sure what housing, medical, food, energy, or any other costs will be well
into the future? What return should Boomers expect from savings and investments when the investment landscape keeps
changing dramatically?
The good news is that maybe your real number isn't quite so high and the calculations required aren’t so difficult or based
upon so many “what if’s”. According to a study done by Georgia State University in 2008, men need to save 4 to 6.8 times
their annual salaries from the years just before retirement. For women, 4.5 to 7.5 times earnings should provide a
comfortable retirement for a longer period of time to address the disparity in life expectancies between men and women.
These are much smaller multipliers than we often hear from the “experts” who want to sell us their “solutions” and these
figures come from an unbiased source with nothing financial to gain. Nice.
For our example, we will take 5.4 times salary for men and 6 times salary for women (the average between the high and the
low estimates in the study). We will assume that each Boomer can live comfortably on an annual salary of $75,000 during the
years closest to retirement. In this example, men would need $405,000 in savings while women would need $450,000 in
savings.
The Employee Benefit Research Institute reports that the average 50 year old with a 401K account has saved just under
$125,000. If you have saved that amount and are around that age you could still reach your magic number by working and
contributing the maximum each year until you reach your "normal retirement age".
You can contribute up to $16,500 each year unless your employer has put a limit on your 401K plan (i.e. 10% limit on salary
of $50,000 limits your annual contribution to $5,000). After age 50 you can add an additional $5,500 (for 2010) in “catch up”
contributions. The maximum contribution and the “catch up” contribution levels may increase from year to year. If your
employer adds matching funds, that amount does not alter the amount that you can contribute.
An aggressive savings plan from age 50 until normal retirement age will be necessary to reach your number but it is possible.
If you can make maximum 401k contributions each year until you retire you will save at least an additional $352,000. Add that
to the average of $125,000 already saved by many Boomers, mix in an average number of increases to the allowed
contributions, stir in some modest earnings combined with the magic of compounding for years and it’s easy to see that you
could get to your magic number.
Maybe you won’t get all the way to the high end of the estimate or even to the middle. But even if you only make it to the low
end of the estimate of 4 to 4.5 times annual salary, you will have a good chance of having enough money to last in retirement.
Of course there are many, many variables and estimates may not prove to be an accurate barometer for the future. But now
that you know what an unbiased, "nothing-to-gain" number looks like, don’t you feel a little bit better? I know I do.
retirement and financial planning than ever.
Confidence in planning for the future declined across
many areas between August 2008 and September
2009.
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