The Middle Class Retirement Delusion by the Numbers - the Smarter Investor (Usnews.com)
The need to save for retirement is accompanied by plenty of hints. Ads like ING’s from a few years ago have neighbors toting around large orange numbers, or simply the word “gazillion” to demonstrate what they thought that their retirement numbers needed to be. Popular authors and academics like Lee Eisenberg, author of The Number, discussed what you’d need in retirement, while in-depth research from William Bengen came out with the 4 percent drawdown as well as, more recently, Wade Pfau’s research arguing that even a 4 percent withdrawal rate in retirement might be too risky. There’s no shortage of good information.
Yet, as an October study by Wells Fargo shows, most Americans are woefully unprepared to manage their own retirement. It’s not just that people have been hit by the most recent recession and economic downturn, it’s that many middle-class Americans have a picture in their minds of what will be sufficient to retire that falls far short of what they will actually need.
Let’s look at some of the numbers in detail: