The Employee Benefit Research Institute's Retirement Confidence Survey was released last week. It found that more than half of those surveyed are "not at all confident" or "not too confident" that they will be able to afford the retirement they want.
Only 42% have tried to calculate how much money they'll need for retirement. Imagine getting on a plane for a long trip. If you were the pilot would you want to know how much fuel will be required to reach your destination? Would you want to make certain the plane had that much fuel and perhaps an emergency reserve in case you needed it?
Americans enter retirement for a journey that will typically last 20-40 years. Most of them don't bother to determine how much money will be required to make sure that the journey will be pleasant. Some of these people will eventually realize that they will have to work longer, save more and spend less. Others will not wake up to the reality of their financial situation until they have run out of money and are forced to make radical changes in their lives.
It is too bad our education system does not teach financial literacy. Too many people enter their working lives with little understanding of how much money is required to maintain a standard of living over several decades. If our schools taught this, more Americans would enjoy the retirement they envision.
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