By Tom Moser

How old will you be when you retire?  Will you need to keep working at least part-time in retirement?  A more sobering question - how long after you retire do you expect to live?  Even if you have answers to these questions today, there is a good chance your answers will change down the road.  If you are close to retirement, it may be easier to develop reasonable expectations.  Regardless of your age, how do you know if your current expectations are reasonable?  All of these questions are essential in developing a realistic retirement plan.

A broad survey by Aite Group found that over half of Gen X (ages 32 to 46) and Gen Y (21-31) respondents expected to retire before the traditional retirement age (65).  The survey also found that only 31% of respondents ages 47 to 57 expect to retire before age 65.  A similarly focused 2006 Pew Research Center survey found that workers age 50 and over expected to retire at an average age of 63.7, while those under 50 expected to retire at an average age of 58.8.  The Pew survey also found that while over 77% of current workers expect to work for pay after they retire, only 27% of retirees reported ever having worked during retirement years.

These statistics show an alarming expectations gap between today’s retirement realities compared to the rather optimistic retirement expectations many younger workers have set their sights on.  Planning for retirement is a tricky business, and certainly not an exact science.  There is an entire profession devoted to estimating how much we’ll need before we kick the proverbial bucket.  No one can predict the future with certainty, and you certainly do not have to pick a retirement age and stick to it.  Nevertheless, it seems that a significant portion of the current workforce, particularly those far from retirement may be in need of a reality check.

There is an endless list of things to consider in developing your retirement plans.  In addition to the questions posed earlier, it is important to consider your expected (and unexpected) expenses in retirement.  Will you maintain the same lifestyle you did when you were working?  Do you intend to travel or take up expensive hobbies?  What about health concerns? While investment returns on your portfolio are generally outside your control, your willingness to except or avoid greater market risk before and during retirement are key considerations before answering the all important question - How much money will you need to retire?

The first step is to establish your goals and expectations for retirement: your spending. Then estimate your pre-retirement income and expenses to determine if your goals are realistic. Hopefully you’ll find you can support non-retirement goals as well such as helping other family members or charity. While having sufficient retirement funds does not ensure happiness, it does take away one less reason to complain!