On average, employees are projected to replace just 85 percent of their income in retirement, compared with the 126 percent they would need when factoring in inflation, longer life spans and medical costs, the study by Hewitt Associates found.
People would need to save from 10 percent to 12 percent of their income throughout their career to keep up the same lifestyle after retirement, said Alison Borland, one of the study's authors. The study found just 19 percent of workers were on track to do so.
Of those studied, more than 1.2 million employees (67 percent) are expected to have less than 80 percent of what they would need to maintain their lifestyle at retirement.
The Hewitt study projects workers will need to save enough to receive 126 percent of their income each year to maintain their standard of living, thanks to rising medical costs, inflation and longer life spans mean.
It also assumes people have paid off mortgages and debt, which will not be the case for many.
Wednesday, July 2, 2008
Study: Workers not saving enough for retirement
Fewer than one in five workers will be able to maintain their lifestyle upon retirement according to a recently released study.