Let me share with you a couple of reasons that the survey came up with, and then I’ll tell you why I think everyone is so depressed about their retirement prospects.
According to the survey from EBRI:
1) Almost 60% of people surveyed had less than 25k to their names, not counting their home and 28% had less than 1k. So the obvious problem here is that people are not saving for retirement in a way that could ever get them financially independent.
2) 26% of people who leave their job for another, cash out instead of rollover.
3) People have too much debt to feel like they can afford to save for the future. In fact, 55% of those surveyed felt like they had a debt problem, and many of them admitted that their debt had risen since 2008.
4) Most people have no idea of how much money they will need to be able to support their desired lifestyle. In other words, they are just blindly participating in this plan or that without a clear target amount of what they need to make retirement a reality
5) 58% of people surveyed said they could get by on less money in retirement than while they were working, yet almost half of all retirees surveyed said their expenses dropped during retirement and 21% actually reported their expenses rose during retirement.
Ok, so here is my take on all of this…every one of these issues has the same root problem, and the statistics back me up. Only a very small percentage of workers ever seek professional advice to get a handle on things like:
1) How much should I be saving each year
2) How can I manage my debt while continuing to plan for tomorrow?
3) What is my number…the dollar amount I will need to be able to maintain my lifestyle in retirement?
4) How might my expenses actually rise in retirement?
So am I telling you to seek the council of a qualified registered investment advisor to determine what you should be doing with everything from your 401k to your IRA, your insurance policies, your savings plans for your kid’s college? Absolutely yes, and I will leave you with a statistic that backs me up: A recent study compared 401k participants who were “do it yourself investors” to those who received advice from professional investment advisors over a 20 year period. The results, after the additional costs for advice, were a net 3% per year in the favor of investors who sought advice. SO while the “do it yourselfers” were paying slightly lower fees for no advice, the advice crowd walked home with an additional 3% per year return on average. As surprising as that may seem, remember what your biggest risk is as an investor…it’s YOU! And while professional investment advisors can help you with investment selection, allocation and retirement forecasting, one of the biggest benefits you will get is they can keep you on track when every cell in your HERD INSTINCT wired brain says to do the wrong thing.
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Information presented in this blog post is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Discussions and answers to questions do not involve the rendering of personalized investment advice, but are limited to the dissemination of general information and may not be suitable for all readers. A professional adviser should be consulted before implementing any of the strategies presented.