$200K for Retirement? Learn Your Future’s True Costs

How much do you think retirement will cost? If your retirement is a long time off, it may feel like projections are unrealistic and goals are unattainable. Acting now can have a real impact on the quality of your financial future.

Younger workers seem to have the most unrealistic expectations, according to the Millennials & Aging survey. One-third of the respondents—ages 21 to 37—think that they need to save $200,000 or less to be comfortable in retirement, even though they expect to live to age 81, on average. The U.S. Bureau of Labor Statistics’ 2014 Consumer Expenditure Survey found that average annual household retirement expenditures for an individual between the ages of 65 and 74 are $48,885. Even with 7% investment returns, that $200,000 would be expected to last less than 5 years.

In fact, an April 2018 CNBC story found that a healthy 65-year-old retiring this year should expect to spend more than $130,000 just on healthcare in retirement!

So, how much do you really need to retire?

What the Experts Say

The March 2017 Merrill Lynch Finances in Retirement Survey found that the average lifetime cost of retirement is $738,400. Setting a savings goal now can help even if retirement is years off.

Personal Perspectives

St. Louis, Missouri-based The Reverend Chelsey Hillyer and her husband, Jordan Ault, began saving for retirement in their 20s, setting “goal posts” for their 20s, 30s and beyond. While they understood the importance of planning, actually saving was more difficult. “It felt easier to try to pay off the car or student loans, than to save for retirement,” says Jordan. A decade into their savings journey, they found that even small savings add up.

Jordan says to “Take little steps, invest just a little more, and it gets easier.”

For the first four years of The Reverend Katie Pearce’s six years in ministry, the Morrilton, Arkansas-based pastor contributed just enough to UMPIP to receive the match offered by the Church. After receiving a raise, she funneled the extra money into her retirement account. “I used the Retirement Readiness Tool on Benefits Access,” says Katie. “It scared me into realizing that I needed to save more than only the minimum.”

Tools to Help You Plan

At 32, Katie benefited from the longterm view provided by her Retirement Readiness Tool projection in Benefits Access. The tool shows how much you are projected to have, how much you may need, and the shortfall or surplus. It includes balances held in Wespath-administered retirement plans, Social Security, and retirement savings held outside of Wespath that you add in the tool. It also enables you to see how different retirement planning and lifestyle choices (e.g., housing and health care costs, discretionary spending, retirement age and investment style) will impact your retirement needs or goals. To access the tool, log in to benefitsaccess.org and go to Take Action > Project Future Values > Determine Retirement Readiness.

When Katie gets closer to retirement, she might want to view her results using the Retirement Benefits Projection, which walks you through choices you will make at the time of your retirement—such as distribution options—and shows your projected benefit amounts. To access the tool, log in to benefitsaccess.org and go to Take Action > Project Future Values > Project Future Retirement Benefits.

From the July 2018 issue of Hark!

Hark cover image April 2019

Hark!—April 2019


Get Assistance

Wespath offers one-on-one, confidential, professional financial planning assistance at no additional cost to you from EY Financial Planning Services.1 EY can help you plan for the tax changes or help with other financial questions or concerns. Call EY at 1-800-360-2539 or visit their website at wespath.eyfpc.com.

1 Costs for EY Financial Planning and LifeStage services are included in Wespath’s operating expenses that are paid for by the funds. EY Financial Planning Services are available to active participants and surviving spouses with account balances, and to retired and terminated participants with account balances of at least $10,000.


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