Originally from our sister publication, SmallBizAdvisor.ca.
It’s no secret than most people aren’t saving enough for retirement.
But those who are able to save enough may come up short as well, says a new position paper from the Retirement Advisor Council, an association of retirement plan advisors, investment firms, asset managers and DC plan service providers who advocate for retirement savings issues in the U.S.
The paper concludes that for many, target income replacement ratios should be higher than the 70% to 75% conventionally accepted as a rule of thumb.
The higher ratio is to account for the projected cost of healthcare in retirement and traditional financial planning concerns such as personal health, children’s education needs and the cost of caring for elderly relatives.
Regardless of target income ratio, the paper calls for consistent contribution levels in the range of 10% to 16% of pay over a 30‐year or 40‐year career.
The paper—Enhancing Retirement Readiness: Consensus on a Course of Action—is available for download here.