But do we practice what we preach?
This question led us to ask NewsDash readers whether they have used a
retirement planning tool to measure their own retirement readiness and, if so,
what they found out.
The vast majority of responding readers (92.2%) said they
have used this type of tool, while the other 7.8% have not.
The good news is, two-thirds of respondents said they are
either ahead of the game (22%) or right on track to reach their retirement
savings goals (44%). Twenty-two percent indicated they are behind but catching
up is realistic, and 12% are so far behind they may never be able to
retire.
Among “other” responses, one reader said he did not need a
tool to know his retirement readiness. Others responded that they used multiple
tools and saw varying results. And some said they will be ready, based on
whether certain circumstances do or do not play out.
In the verbatim responses, several respondents indicated
they have been hypocritical in touting the tools while neglecting to use one
themselves, one reader responding, “I am a classic example of ‘do what I say,
not what I do.”
Others discussed the flaws inherent in many retirement
calculators. Our favorite response was: “The tool lies.”
Additional comments from readers on how these tools of the
trade have worked—or not worked—for them:
“There are many tools to choose from, and each tool has
assumptions that it makes. So each individual needs to look at [his] own
situation and the assumptions, and use several tools to really get a good
‘feeling’ for where they stand.”
“We only preach that participants should use these tools. We
don’t actually use these tools ourselves!”
“I didn’t think the retirement planning tool was entirely
useful, because even though it said I was on track, I don’t agree.”
“I’m in the business and, therefore, have studied readiness
and used different calculators and understand the nuances of the various
assumptions and models. But to predict my future health, life expectancy,
future medical costs, living cost, etc., is hard. So, like everyone else, I
don’t know how to answer the question: ‘How much do I need?’ Therefore, too
much ain’t enough!”
“The calculator indicated I could retire now (in my early
50s), but that seemed terribly optimistic to me!”
“I’m 30, but I’m trying to prepare. These tools are often
geared toward near-retirees. They need to be geared to[ward] individuals my
age, so that we don’t face a retirement crisis.”
“I’ve used different retirement calculators and seem to be
on track. How much is enough? A trusted financial adviser should be part of
everyone’s retirement planning.”
“The tool indicated I’m ‘right on track,’ but I still feel
insecure, even deferring the federal maximum plus the catchup into my 401(k)
for the past several years.”
“I think these tools need to consider current spendable
income and not just base everything on salary. If I am putting away 15% and
having Social Security come out, then my spendable income is much less than my
current salary. If I need 80% of my spendable income, the goal is much easier
to attain. Someone making $100,000 and saving 15% with 5% in Social Security
(just using simple numbers for the example) would have spendable income of
$80,000. Eighty percent of your spendable income would be $64,000 per year, but
that is only 64% of your salary. I may be completely wrong, but this makes more
sense to me, since I won’t be saving or paying Social Security when I
retire.”
“Three out of five tools suggest I’m on course. My horoscope
reads as clearly.”
“I’ve used these tools over several years. Initially I was
surprised to find I was behind. I have steadily increased my retirement savings
and am on track.”
“My husband and I both used a retirement tool offered by our
respective 401(k) providers. Mine indicated I was somewhat behind and his
indicated he was ahead of the game. So, taking his results into consideration,
I consider myself to be right on target!”