I like to tell people what to do. But only when they say they want to retire. Everyone wants to know "their number." So I wrote a book, appropriately and straightforwardly titled, How to Retire With Enough Money And How To Know What Enough Is. Though I am a prepared advisor on matters related to numbers, savings and investment strategies, I am often unprepared for my advisees’ emotional responses. When I tell people their target savings amount and how much they need to save out of each paycheck, I find myself on shaky ground. I need different skills—therapeutic skills.

This is how you figure out how much money you need to retire. Let's say you are about average and have adopted a lifestyle pretty close to your take home pay. Suppose you earn about $80,000 a year and spend about $50,000 a year. I calculate how much you need through adjusting for inflation, assuming a reasonable rate of interest, and calculating your Social Security benefits. If you want to ensure you have enough retirement income to support a $50,000 a year lifestyle in retirement, a good target is to save $550,000. Generally, people can hit this target by saving 10% of every paycheck for 40 years. That’s until you are 85; you will need more to ensure you have enough to get you to 95.

From here, the news gets a little bit worse. If you believe investment earnings will be lower than 6%, you’ll both need more savings and you’ll need to save more. For example, if you expect to earn 6% at the high end, then you only have to save 5.2% of your pay. But on the low end, if you expect close to zero returns, then you have to save 35% of your pay for the rest of your life.

That’s the math. But when I tell folks how much they will need, I know only a small percentage of people (who aren’t high earners) are on track. Half of people near retirement age do not have a 401(k) or IRA. For the fortunate who do have retirement savings accounts, the average balance is about $120,000. Unfortunately, that balance will not provide enough retirement income for even low-income workers—and those who have retirement savings are generally not low-income people.

Here’s where I get shaky. When I tell people their target number, I get a couple of reactions. One man leaned away in his chair, pushing himself away from the table. At the end of our conversation, he was two feet away. Another person clenched his fist, stood straight up and told me it was impossible to save with his expenses. One woman hunched over in her seat and let her hair fall in front of her eyes. She blamed herself, almost whispering, “I guess I spend too much.”

How do I handle telling people they need $1 million in retirement savings when they have $10? My options are limited. Mostly, I ask, “Do you think you could work a little bit longer or reduce your expenses?” The other option—suggesting they may live only 20 years in retirement rather than 30—is cold comfort.

While people don’t punch me out or roll into a catatonic ball when I give them retirement advice, I worry I am not helping. I have an impulse to lie and say everything will be all right. But in reality, the nation is facing a retirement crisis, and that crisis boils down to a worried, panicked person, one at a time. 

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