Here's Why 401(k) Savers Risk Falling Short in Retirement
It's a big misconception that living costs shrink a lot for most seniors. Sure, you might spend less on transportation if you no longer have a job you're required to commute to. And if you manage to pay off your mortgage ahead of retirement, that's another bill you'll manage to shed.
But all told, you should still expect to need around 70% to 80% of your former income once you retire. And Social Security will only provide about half of that, assuming you earn an average wage (if you're a higher earner, the program will provide even less replacement income). That also assumes no benefit cuts, which are a distinct possibility right now due to financial issues the program is anticipating.
So you'll really need to bring a decent chunk of savings with you into retirement. But new data from Vanguard reveals that 401(k) plan participants may not be socking away enough money to avoid a financial shortfall later in life.
Source Fool.com
