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Don’t take a lifestyle cut in retirement

April 25, 2012 Comments off

Don’t take a lifestyle cut in retirement

Source:  Fidelity
Americans have responded to the financial turmoil of recent years with a shift to thrift that has helped bolster their personal household economy and boost their retirement readiness—just not enough to fully finance the lifestyle they envision. That’s the finding of Fidelity’s new Retirement Savings Assessment,1 a survey of 2,800 U.S. investors. The bottom line: many investors could still, on average, face a potential 28% income drop in retirement.1
Single women we surveyed say they think they will fall even shorter and face, on average, a potential 37% income drop. However, savvy savers who take advantage of both workplace savings plans and IRA savings vehicles say they expect to come out markedly ahead of the average, or 21% short of their retirement income goals.
“These results are significant,” says Kathy Murphy, president of Personal Investing at Fidelity Investments. “But finding the money to fill the income gap is not unattainable. In fact, our analysis of five different strategies concluded that many people can still achieve their retirement goals in a relatively easy manner. The key thing is to take action now—and the sooner the better.”
You’ve probably heard about, or even utilized, some of these common investing steps at some point during your life, including adjusting your asset allocation, saving more in a workplace savings plan or individual retirement account (IRA), delaying or working part time in retirement, or tapping into home equity. What you may not realize, however, is the powerful impact these simple actions can have when they are used in certain combinations or all together. The potential results of utilizing these actions in strategic ways may surprise you.
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