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A Retirement Reality Check, Courtesy of Gallup

Thinking about your eventual retirement? If you’re relatively well-off, you’re probably confident that your tax-deferred savings will provide your major source of income. But if you’re at the other end of the income ladder, you’re more likely to count on Social Security benefits to tide you over.

Those are some of the findings of a newly released Gallup poll that reveals glaring contrasts between how nonretired Americans from different income levels expect to fund their retirement years. The key takeaways:

The survey also reveals that many Americans probably haven’t come to terms with the economic realities of retirement. Overall, for example, about one in five Americans expect to support themselves in retirement primarily through part-time work. But according to the Social Security Administration, relatively affluent retirees must generate at least 65 percent of their pre-retirement income level to maintain their standard of living, while less-well-off Americans – who need to spend more of their income on necessities – may have to take in as much as 90 percent of what they made before retirement. What’s more, they’re likely to find it difficult to make that much, particularly if they’re at the lower end of the economic ladder, because Bureau of Labor Statistics research shows that workers in part-time positions usually earn significantly less per hour than full-time workers.

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Additionally, about the same number of retirees – 20 percent – expect to live primarily on the home equity that they’ve accumulated. But that may require them to sell their homes and downsize to a condo or rented apartment, or move to a less-expensive part of the country.

As Louisiana-based financial planner John H. Gin notes, fluctuations in the real estate market can erode the value of that nest egg, and a homeowner with a paid-off mortgage may have to add rent to his or her monthly expenses. “If you plan to tap your home’s value to support your retirement, proceed with caution,” he writes. “Remember that the primary function of your home is to provide a roof over your head, and using equity to fund retirement requires careful planning.”

Finally, age also appears to significantly influence an individual’s retirement outlook. Have a look:

Nonretirees Gallup poll


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