Retirement & Financial Planning Report

Starting saving for retirement early helps greatly to prepare for a secure retirement but for those who don’t, it is possible to catch up—although the needed savings rate would be much higher—according to recently compiled statistics from the Employee Benefit Research Institute.

EBRI looked into the savings needed under various scenarios so that retirees would not run out of money to pay for average expenses plus uninsured health care costs throughout retirement—what it calls a “successful” retirement.


For example, it said that a single, 25 year old earning $40,000 a year, with a total (employee and employer combined) contribution rate of 3 percent of his salary until age 65 would have a 50-50 chance of retirement income adequacy. But saving 6.4 percent of salary would boost the chances of success to 75 percent.

In contrast, someone with no previous savings and earning that same $40,000 and starting at age 40 would need a total contribution rate of 6.5 percent of salary just to have a 50-50 chance at a financially successful retirement. To reach the 75 percent chance of success would require saving 16.5 percent of salary.

And at 55, that same person would need a total contribution rate of 24.5 percent of salary just to have a 50-50 chance of success.

The numbers are for males; needed savings are slightly higher for women, largely due to longer life expectancies.