An analysis from Hewitt Associates, Total Retirement Income at Large Companies: The Real Deal, addresses the fact that women live about 22 years after retirement, compared to men who live 19 years once retiring. Based on current trends, Hewitt estimates that only 1 in 5 Americans will be able to meet their financial needs in retirement. Two-thirds are expected to have less than 80% of their projected needed funds.
Hewitt figures that women need to replace 130% of their final pay at retirement. The typical income-replacement metric today is between 70 to 90% of pay.
To solve this problem, Hewitt recommends that employees take the following actions:
- Increase savings rates in 401(k)s and other personal investment vehicles
- Be smarter investors
- Find lower fund management fees
- Delay retirement.
Medical costs racked up after retirement can quickly eat up retirement savings — even if Medicare is in place.
For more on this personal fiscal challenge, see my repeated mentions of the important EBRI studies in Health Populi:
Declining confidence in retirement finances — EBRI finds growing health insecurity: http://www.healthpopuli.com/2008/04/declining-confidence-in-retirement.html