August 23, 2014. How much of your pre-retirement income do you think you can count on once you are retired? A recent survey from T Rowe Price. “Retirees Live on Less“, found that most of the retirees in their survey are getting along on about 2/3 of their working days income.
The survey was conducted by the big mutual fund company among people who had money in at least 1 401(k) account. Their median household assets – investments and home equity minus debts – were $473,000. That would put the sample much better off than the average retiree, since only half of Americans over 45 have managed to save over $25,000.
Even though most of the people in the survey are fairly well fixed for retirement, those surveyed said they’ve had to lower their living standards, with four out of 10 describing their situation as having to adjust “a great deal.” Most of them have 70 to 80% of their pre-retirement income, but a significant percentage are having to get by on 60% or less. If this sample is having to cut back this much, we can only assume that a big number of baby boomers who aren’t so well prepared are about to face retirement with a greatly diminished standard of living.
The people in the sample reported retirement incomes of between $25,000 and $100,000. Social security was expected to provide the majority of their income, followed by defined benefit pensions and retirement savings.
One interesting observation made in the comments to an article in “Squared Away” on this issue is that many retirees only spent part of their pre-retirement income, presumably saving the rest. So for them the adjustment is not so great.
Comments? What percentage of your pre-retirement income do you expect to be able to count on once you retire? Has that percentage changed over time. Please share your thoughts and concerns in the Comments section below.