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Financial Literacy Month: Retirement Roundup 2012

by on April 9, 2012

By Meghan Stewart

According to recent reports, if you’re a late baby boomer or Gen X worker right now, you’re simply not as prepared for retirement as you should be. What’s worse, these generations in their 30’s to 50’s are much less likely to have pensions and face a scenario where they may get a monthly Social Security check that only covers 30% of their monthly living expenses. Many Gen X members have not saved nearly as much as they should because they are counting on social security as a huge contributor to their retirement. Unfortunately, the general census about social security seems to be if the U.S. government doesn’t fix the social security system along with the huge debt and deficit, social security may be the next thing in the U.S. economy to collapse leaving many without the proper funds needed to retire.

With this is mind, the PowerWallet team wants to help celebrate National Financial Literacy Month by giving you a one-week crash course of tips, advice and resources you can use to securely and successfully retire. We’re kicking off our 2012 Retirement Round-up with some facts and figures to help get you motivated to start paying attention to your retirement savings.

The Life Insurance Marketing and Research Association released some startling statistics last month:

  • 35% of Americans age 30-50 have less than $10,000 saved for retirement
  • 56% of all workers have less than $25,000 in savings and investments
  • 75% of all workers have less than $100,000

This effectively means about 3 in 4 Americans are simply not prepared for retirement. What’s worse, we don’t seem to be fixing the situation either:

  • Only 22% of Americans contribute to a 401(k) at their job
  • Only 15% have an IRA account

The old logic used to save for retirement was to save about 70% of your annual take-home income for retirement. Now, with disappearing pensions and dwindling Social Security benefits, most experts now say you need at least 75% of your income for each year of retirement. So if you’re living on $50,000/year as a working American, you need $37,500/year to live comfortably after you retire. So, for those 3 out of 4 Americans with less than $100K saved, you’re looking at either working the rest of your life or only having a few years of retirement without needing at least a part-time job.

Given this slightly depressing work-until-you-die outlook, 2012 is the time to take power over your finances and your retirement future by getting organized by establishing a real and concrete savings plan. Your PowerWallet team is here for you, with advice throughout the week on where to put your money and the best strategies to use to maximize your investments without risking your savings.

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