The author of the article sets forth this sensible assessment of what it will cost upper middle class people to retire.
To maintain living standards into old age we need roughly 20 times our annual income in financial wealth. If you earn $100,000 at retirement, you need about $2 million beyond what you will receive from Social Security. If you have an income-producing partner and a paid-off house, you need less.
Got that? You need 20 times your annual income to survive in comfort. This assumes that you will leave no inheritance to your children. You and your spouse will consume all of your capital.
This number is startling in light of the stone-cold fact that most people aged 50 to 64 have nothing or next to nothing in retirement accounts and thus will rely solely on Social Security.
People have not sat down with their spouses and calculated exactly what they will need to live on, beginning the day after they both retire. Why not? Because they have a pretty good idea that what they will find will smash their dreams.
If we manage to accept that our investments will likely not be enough, we usually enter another fantasy world – that of working longer. After all, people hear that 70 is the new 50, and a recent report from Boston College says that if people work until age 70, they will most likely have enough to retire on.
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