According to a Schwab survey of almost 1,800 investors across nine U.S. markets, affluent Americans may be miscalculating how much they’ll need to retire. While 80% feel secure about their ability to retire comfortably, respondents reported a 43% drop — from $115,000 to $66,000 — in the amount they would need to retire compared with what their income had been.
“In many cases, we tell clients to assume they'll need roughly the same annual income in retirement as they had beforehand unless they anticipate a significant lifestyle change, and to take into account longevity risk when planning how much money they might need,” says Schwab’s Carrie Schwab-Pomerantz.
Another contributing factor to an individual’s retirement readiness is whether or not they are prepared to work through retirement, even if it's just part time. Of the people surveyed, 30% say they don’t plan to work at all in retirement; 46% say they might work; and only 10% say they will have to work at least part time. Although survey respondents’ average confidence level has changed very little since last year, 53% expressed the most concern about incurring unforeseen Medicare or health care costs in retirement.
