Halloween near but latest retirement study downright scary

I read a lot of retirement readiness studies, but frankly, this latest Wells Fargo telephone survey of 1,000 middle-class Americans between the ages of 25 and 75 scares me. It displays a real disconnect between what Americans need to do and what they are doing. For example, when asked how much money they need to support themselves in retirement, the median response was $300,000. But to date, the median savings of the respondents is only $25,000. How much does the average American think they can afford to withdraw from that meager nest egg each year? The typical response was 10% — nearly triple the generally accepted rule of thumb of a safe 4% withdrawal rate. What's the solution? Work longer, they replied. Yet a third of the respondents admit they would have to work until at least 80 in order to live comfortably in retirement, even though most admitted their boss wouldn't want them hanging around that long. For many, their retirement income goal isn't very realistic. About a third of the respondents estimate their retirement income will be about half or less of their current annual income, compared with the standard 75% of pre-retirement income that is usually considered a bare minimum for most retirees. How did they come up with these predictions? Most of them — 75% — guessed. “Retirement has become a guessing game,” said Laurie Nordquist, director of Wells Fargo Institutional Retirement and Trust. “But people can't afford to approach 20-plus years of their life by ignoring the facts.” That's where financial advisers can help, she said, working with business owners to set up retirement plans and individual clients to impose a reality check of how much to save, how to invest and how much they can afford to spend in retirement. “Advisers can help get the message out there,” she said. Social Security continues to be strong component of retirement planning for the middle class. More than 70% of non-retired survey respondents said they would prefer to delay collecting social Security benefits so they receive higher payments. That's the opposite of standard procedure today when the majority of retirees claim Social Security benefits before their normal retirement age even though it means smaller benefits for the rest of their life. Maybe there is some hope after all.