Color of Money: Retirement is a Numbers Game

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  • WASHINGTON — Do you know your number?

    That would be the amount of money you need — including your Social Security and a pension (if you have one) — to retire comfortably.

    A few years ago, the financial services company ING created a humorous advertising campaign around “Your Number.” Here’s how one ad went:

    Neighbor: “Hey Clark, what you got there? (Clark is carrying a large, lengthy orange number amounting to just over $1 million.)

    Clark: “It’s my number. It’s the amount I need to save to retire the way I want.”

    Clark to neighbor: “Is that your number?” (The neighbor is clipping his hedges on top of which sits his orange number that just says “Gazillion.”)

    Clark asks: “How do you plan for that?

    Neighbor: “I blindly throw money at it and hope something good happens.”
    The nonpartisan, nonprofit Employee Benefit Research Institute (EBRI) has been asking people for years about their confidence level when it comes to their ability to have a financially secure retirement. The most recent survey shows that many Americans aren’t very optimistic.

    EBRI found that 21 percent of Americans are not very confident about retiring comfortably and 28 percent aren’t comfortable at all. The latter figure is the highest percentage since the institute began surveying confidence levels.

    So why are people so pessimistic?

    It’s partly because they don’t know how much they will need for retirement.

    Less than half of workers (46 percent) surveyed report they and/or their spouses have tried to make that calculation. And when asked how much they think they need to save, their estimates were high. Twenty percent guessed that they needed to save between 20 percent and 29 percent of their annual income, and nearly one-quarter said they would have to save 30 percent or more.

    “Many workers believe that they have to save substantial, perhaps even unreachable, percentages of their income each year to achieve a comfortable retirement,” said Jack VanDerhei, EBRI research director and co-author of the report. “In many cases these savings targets are aggressive, but they may not be based on a careful analysis of their individual circumstances.”

    VanDerhei added, “Many people simply don’t or won’t take the first basic step to plan for a comfortable retirement.”

    Workers’ confidence in having enough for retirement decreases as the average amount they think they will need to save increases. Americans 45 or older who aren’t at all confident about having enough money to retire believe that the percentage of income they need to save each year is, on average, 43 percent, an unattainable number for most.

    There are many calculators to help you find your number. EBRI and its American Savings Education Council have created a retirement planning calculator, “Ballpark E$timate,” at

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