Another week, another retirement “number.” This time it’s in the latest Charles Schwab Retirement Survey. Among 1,000 people surveyed, the average respondent figured he or she needed to save $1.8 million to retire. (That figure is up from $1.7 million in the same survey a year earlier.) Touchingly, 86% also told Schwab they were either “somewhat” or “very” likely to achieve their goals.
Er, no. If the numbers show anything, it’s that most people don’t understand math, don’t understand finance and are wildly out of touch with reality. Some simple calculations will show that these figures are all wrong. First, let’s start with the bad news. There is no way 86% of people should be “very” or “somewhat” confident that they are going to hit that $1.8 million target, or anything like it. Let alone that 37% think they are “very” likely to hit it. Median retirement-account balance at the moment? Try $27,000 and change, says 401(k) giant Vanguard. Even that’s overstating the picture. The Federal Reserve’s most recent triennial Survey of Consumer Finances says the median American household has $26,000 in total financial assets, including savings accounts, life insurance, 401(k) plan and the like. Among those aged 45 to 54, the figure is $37,000, an …
Article Attribution | Read More at Article Source