Most retired Americans are living on insufficient income

Written by
Peter Dunn

I talk about retirement a lot. I have good reasons of course. I see first hand the insane situations people get themselves into when they don't prepare. The reality is that preparing for retirement is something you have to prioritize your entire financial life. Still not convinced? A new report from could change your mind.

The study measured pre-retirees' income to their retired counterparts. In the financial world the buzz percentage used to be 80 percent. That is, retirees should aim to have 80 percent of their pre-retirement income to live on in retirement. This percentage has moved down to the 70 percent range recently. I agree with the change, 80 percent is extremely unrealistic. The new report from found that in 49 of 50 states retirees are only living on 60 percent of their pre-retirement income.

Your retirement income is a combination of Social Security, what you save and invest on your own, and (if you are lucky) a pension. Actually, DC had the best score at 73 percent. This isn't surprising considering the prevalence of government pensions in that area. But pensions are fading away and now only 15 percent of the private sector provides one.

Financial professionals will tell you the only way to have 70-80 percentage of your pre-retirement income in retirement is to accumulate more. And you do need to accumulate more, but equally important is the need to cut expenses and break your dependence on your income. I honestly believe the 80 percent goal is wholly unrealistic. I'm a big believer in living off of 65 percent of your pre-retirement income. This is absolutely doable, especially if you slowly and consistently cut expenses leading up to retirement. It's unrealistic to think you'll adjust from living on 100 percent of your income to living off of only 65 percent. Weaning yourself off of your income slowly, over time, is much more realistic.

This week on The Pete the Planner Radio Show on WIBC I interviewed Mike Sante of about this report. He has a lot of insight into this topic, take a listen below. You can also view the report here.

Step up your financial wellness game.

Stay up-to-date with the latest in employee wellbeing from the desk of Pete the Planner®. Subscribe to the monthly newsletter to get industry insights and proven strategies on how to be the wellness champion your team wants you to be.