Seventy-four percent of Americans underestimate how much they will need for a comfortable retirement, Fidelity Investments found in its first-ever Retirement IQ Survey. Twenty-five percent think they will need two to three times their last full-year income. For those in the 55 to 65 age bracket, 19% have this perception. The fact is, most financial professionals say people need 10 times their last year’s salary to exist in a secure retirement.
This was one of eight questions Fidelity asked of 2,054 people last December. The second question was, in how many years over the past 35 years did the stock market produce a positive return? Only 8% answered correctly: 30 years. “Even with market volatility, the stock market has performed remarkably well over the long term,” notes Ken Hevert, senior vice president of retirement at Fidelity.
Next, Fidelity asked, if you were able to set aside $50 every month for retirement, how much would that accrue to within 25 years? Sixteen percent answered $40,000 correctly.
If you were to retire at age 65, how long would you need your retirement savings to last, was Fidelity’s next question. It’s 85 for men and 87 for women—meaning that the savings would need to last for approximately 22 years. Only 33% of folks got that right.NEXT: Social Security benefits