Do retirement warnings go too far?

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The Schroders 2022 U.S. Retirement Survey reveals that Americans say it will take $1.1 million on average to retire comfortably.

Yet only one-quarter of those surveyed expect to reach that savings mark. Significantly, among respondents nearing retirement — ages 60 to 67 — more than half say they will have less than $250,000 saved at retirement.

Survey numbers similar to these results are routine these days. These surveys feed the widespread sense that the retirement years has become synonymous with financial disappointment.

The current rise in inflation to a 40-year high only adds to the belief that retirees are doomed to fall short of the money they’ll need to maintain their standard of living in retirement.

Problem is, the drumbeat of retirement catastrophe stories are misplaced.

Figures like $1.1 million are unattainable for many savers. But the number only represents the size of an accumulated pot without providing any information about annual income and expenses. Context is lacking and when it comes to personal finance, context is everything.

More important, there is a serious retirement crisis and it’s concentrated among older adults who earned low and unstable wages during their careers. They typically worked for employers who didn’t offer a retirement savings plan or health insurance at work. They’ve lived on the financial margins during their work lives, and they’ll continue to do so in retirement.

That said, most retirees should find themselves in decent financial circumstances with room to maneuver later in life, says Meir Statman, professor of finance at the Leavey School of Business at Santa Clara University in a recent conversation.

For one thing, spending typically falls in retirement. Statman notes that spending at age 84, adjusted for inflation, is 23% less than it was at age 62 among college-educated American couples.

At the same time, experienced workers are experimenting with different ways to continue earning money during the retirement years, including self-employment and part-time work.

The current tight labor market is a boon for those who want to work in retirement. Working longer also makes it practical to delay filing for Social Security, a strategy that boosts your benefit.

Perhaps most important, we often forget how creative people are at coming up with solutions. Retirement is no different.

By carefully thinking through what really matters to them, future retirees will devise creative and sensible answers to the question, “How much is enough?”

Farrell is economics contributor to the Star Tribune, Minnesota Public Radio and American Public Media’s “Marketplace.”