Measuring The Adequacy of Retirement Savings
I saw a discussion online today about trying to measure retirement income readiness. There was discussion of Black Rock’s CORI retirement index, which tells you how many dollars you need to save to produce a dollar of income at retirement. It’s a helpful number to know, even if it’s possibly a depressing one. Of course, knowing whether you have saved enough for retirement starts with knowing how much income you need in retirement, which is a process in itself: how much income for a basic retirement or a more “robust” one. One you know these numbers, which obviously differ greatly from person to person, you can determine what benefits you have to offset your income needs, such as from Social Security or pensions. What’s left is the number for which you have to save. If your income need is $75,000 per year and you have Social Security and pensions of $50,000, you have to save enough to produce the additional $25,000. The online report indicated that about $18 would be needed to produce $1 of retirement income, at today’s rates, so to produce $25,000 you would need $450,000 in retirement savings.