There’s a substantial gulf between the amount of money Americans have actually saved for retirement and what they might need to last throughout their golden years.”

This article reports the results of a survey conducted by the Employee Benefits Research Institute which discovered that nearly three in five people surveyed had saved $25,000 or less for their retirement.  Even worse—more than a quarter of those surveyed had saved less than $1,000.

To help plan for retirement, many financial experts suggest that you need between 70 and 85 percent of whatever yearly income you had during your career in order to sustain the lifestyle you enjoyed prior to retiring.  While these calculations provide a recommended dollar amount to provide retirement income, the same calculations often create two problems.  First, there is often a big gap between what people have saved and what they need for retirement.  Second, the amount of money you need in retirement is based on what’s important to you and the standard of living you want in retirement.  And the you may be the most important part of retirement planning.

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Teaching Suggestions

You may want to use the information in this blog post and the original article to

• Explain why you should plan for retirement early in your career rather than waiting until you are about to retire.
• Reinforce the concepts of the time value of money and a long-term saving and investing program.

Discussion Questions

1. Many financial experts suggest you begin retirement planning as soon as you begin your career. What are the benefits of planning for retirement planning sooner rather than later?
2. How is the time value of money related to a long-term investment program and retirement planning?