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Makin' Money

The big money challenge: The last stage of life

Chris Farrell Feb 2, 2011

Imagine. You’ve paid off your student loans. You bought a house. You put the kids through college. “But many 50-somethings think the biggest financial challenge of their life is still ahead of them: retirement,” according to U.S. News & World Report.

That result comes from a recent Kelton Research survey of 642 Americans age 50 commissioned by Charles Schwab. I found this part of the survey response in the article particularly intriguing:

When asked to estimate the percentage of their pre-retirement income they will need to cover living expenses in retirement, the older workers gave a wide variety of answers. The most common estimate is between 71 and 80 percent of their current income (22 percent). But almost a third (31 percent) of retirement savers say they will be able to get by on less than half of their current paychecks.

My theory is that we often forget how creative people are at coming up with solutions. Retirement is no different. Many retirees find that they can make significant cuts in expenses without slashing their standard of living. The retired have the time to shop for and take advantage of deals and discounts, to clip coupons and plan ahead. It’s easy for them to substitute home cooking instead of a late night dash after work to get takeout. A letter writer to the New York Times once put it nicely: “You can get by on a lot less when you’re retired, without really depriving yourself of anything important… If I had known earlier how much ‘wealth’ derives from such simple pleasures, I would have retired much sooner.”

So, you’ve paid off your student loans, navigated college, bought a home
By the time you reach age 50, you have already faced many money challenges including paying off your student loans, buying a home, merging finances with a spouse, and caring for children. But many 50-somethings think the biggest financial challenge of their life is still ahead of them: retirement.

A urvey. Lots of uncertainty abiotu what need. Over half (53 percent) of Americans over 50 think their most challenging financial issues are still in the future, according to a recent Kelton Research survey of 642 Americans age 50 and over commissioned by Charles Schwab.
When asked to estimate the percentage of their pre-retirement income they will need to cover living expenses in retirement, the older workers gave a wide variety of answers. The most common estimate is between 71 and 80 percent of their current income (22 percent). But almost a third (31 percent) of retirement savers say they will be able to get by on less than half of their current paychecks.

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