During our working years, the amount of income we earn is ultimately what shapes the spending and lifestyle choices we make. Over time, we become accustomed to living a certain way and having certain resources available to us and our families. These parameters are what create a person’s standard of living.
Retirement is different, of course, since we derive retirement income in different ways and from different sources. As a person makes the shift from the working world to the retirement world, an important question must be addressed: do you have the resources and assets needed to maintain the same standard of living in retirement as you did during your working years? Is your nest egg big enough?
Almost Half of American Households Won’t Have Enough Retirement Income
Research suggests that when it comes to maintaining a standard of living during retirement, many investors could be in trouble.
The National Retirement Risk Index (NRRI) is an index measuring the share of working age American households “at-risk” of being unable to maintain their pre-retirement standard of living in retirement. As of 2010, the NRRI showed that even if households worked to age 65 and annuitized all of their financial assets (including the receipts from reverse mortgages on their homes), 53 percent of American households were at risk. This is a big number.1
The market has risen since 2010 and housing prices have also increased, which helps, but not every household participated fully in the recovery. Even for those that did, it still remains fairly clear that households aren’t saving enough.
Have You Saved Enough To Maintain Your Standard of Living Throughout Retirement?
In order to answer this single question, a person needs to ask him or herself several other questions about their standard of living, while simultaneously examining the size of their nest egg and what retirement income sources are.
In future posts, we’ll provide you a guide to help you gather a better understanding of whether you’re adequately positioned to maintain your standard of living throughout retirement.
If you’d prefer to speak with one of our Wealth Managers to walk through whether or not you’re ready, please do not hesitate to give us a call at 1-800-541-7774. We have resources available to help you address these questions. You can also get started with an investment plan here.
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