The Charles Schwab poll found that the number of respondents confident of their retirement preparation efforts plummeted when they were briefed about the reality of retirement financing.
With that additional briefing, the 64% of respondents proclaiming their confidence in their retirement balances hit a free fall to 32%.
(The rule of thumb used for the reality check, established by the Schwab Center for Investment Research says that for every $1,000 of desired monthly income, an individual will need approximately $230,000 in retirement savings in today’s dollars. In other words, in order to produce an annual income of $75,000, a retiree would need $1.4 million in savings.)
The Schwab poll found that 31% of respondents had socked away less than $100,000 for retirement while 56% had accumulated less than $250,000.
One reason for respondents’ less-than-overwhelming success as retirement savers, according to the Schwab researchers: the respondents aren’t exactly flocking to the available retirement savings programs. Four out of 10 of those with an employer plan don’t put aside the maximum amount allowed. Nearly 70% haven’t funded an IRA and 63% said they don’t plan to.
As have other prior surveys, the Schwab study found that people aren’t maximizing the beefed up savings provisions contained in recent tax reform law.
The study was conducted from July 12 to July 17 with 1,020 respondents, of whom 515 were men and 505 were women.
Schwab said all respondents were 45-65 years old, had a household income of at least $75,000 in 2001 and were working full-time or part-time and did not have a pension which makes/will make regular fixed monthly payments.