Mutual fund giant and financial services provider Fidelity Investments recently surveyed 3,000 investors to determine how prepared the average person is for retirement. The results show that those with 30 years until retirement should be fine if they increase their savings and invest a little more aggressively. But those over 55 are facing a significant gap between what they need to retire and what they have.
Fidelity assumes that the average retiree will need to replace about 80 percent of their income in retirement. Their average survey participant reported an annual income of about $74,000 a year, which means they will need to generate income of about $4,800 a month, on average.
The average income from Social Security benefits, pension payments and withdrawals from investment accounts is expected to cover about $2,700 a month. Fidelity says the average shortfall will be about 44 percent of that amount, or $2,100 a month.
Some things to note about surveys in general
It is important to remember that these are averages drawn from one survey sample. Your personal circumstances will determine how much income you need and how much will be available to you. The value of the Fidelity report may be in raising alarm levels and prompting many to consider how they will fund their retirement, but you should consider your personal situation before becoming concerning about a potential retirement income gap.
If you are over 55, saving more can certainly help, however, it might not be enough to make up that potential income gap. Increasing your exposure to the stock market could be something to consider, but that also depends upon your personal circumstances and risk tolerance.
Recent research done by the financial planning community has shown that reverse mortgages could be one part of a very effective strategy for delivering the highest possible level of stable retirement income. You can contact us at Legacy Reverse Mortgage and we would be happy to provide details on that research to you or your financial planner.
A reverse mortgage could help you retire in comfort and therefor, is certainly an option worth considering.
The best news from the Fidelity may be the part of the report detailing life expectancy. Retirees can expect to live to the age of 92 and enjoy about 25 years of retirement.
According to a recent report on Fox Business, “Based on the 2010 Census, the Society of Actuaries estimates that in the case of a married couple where both individuals are age 65 today, there is a 31% probability one will live to at least age 95!”