"To just tell someone they need to save $4 million for retirement is not helpful anymore," says Christine Fahlund, a senior financial planner at Baltimore-based T. Rowe Price. "People don't react positively to that" because it's out of context with what they earn.
Now, financial planning firms are trying to get more specific---unleashing tools to help workers gauge where they are on their road to retirement. They're offering new strategies designed to make smaller nest eggs provide more money and last longer, and they're rethinking some of the pillars of conventional wisdom.
These new planning efforts are happening as the first wave of Baby Boomers closes in on retirement. The goal is to get you to retirement with no debt and a nest egg equal to 12 times your pre-retirement income.
A recent report by the nonprofit Employee Benefit Research Institute showed that a quarter of workers are "very confident" about retirement security, even though 22% of them aren't currently savings, and nearly 40% have less than $50,000 put aside. Nearly 45% of households with working-age adults are at risk of being unable to maintain in retirement their pre-retirement standard of living, according to a study by the Center for Retirement Research at Boston College.
Source: The Wall Street Journal, July 1, 2006