Have you lied lately? C'mon, tell the truth.
It's a sad fact, but most of us -- probably all of us -- lie from time to time.
- 49% of U.S. high school boys and 36% of girls admit lying sometimes "to save money."
- When the folks at Automatic Data Processing processed 3.8 million background checks, they found that 52% of job applicants had lied on their resumes.
- 25% of workers have lied about why they were late to work, according to a CareerBuilder.com survey.
- A U.K. survey found that 46% of men and 33% of women lie about what they've read, in order to impress friends or potential partners.
But what's even worse: We lie to ourselves, too. According to the 2008 Retirement Confidence Survey (RCS), 61% of Americans surveyed are very or somewhat confident that they'll have enough money to live through retirement comfortably. But only 47% have taken the time to calculate how much money they'll need in retirement.
Something is definitely fishy.
There's a pretty big difference between "No, that outfit looks great!" and "I've got enough to live on in retirement, really." One saves face for a friend, the other risks your very way of life.
Think I'm kidding? Have you said any of the following things to yourself lately?
- Yeah, the market is a mess, but I'm OK. I've got an IRA and a 401(k).
- I should be fine. My company offers great benefits to retirees.
- My portfolio has done pretty well lately.
They might even be true -- in a relative sense. For 2008, after all, even a 10% portfolio loss would be considered a huge win -- no matter how much it sets you back. But if you haven't taken the time to figure out what you'll need in retirement and how your retirement saving is going, you don't actually know if those statements are true.
But if you keep telling yourself that you're fine, you'll start to believe it -- and then you won't do the research to find out if you're telling the truth or lying. And that could be the difference between the retirement of your dreams and one that is, well, gruesome.
If you want to be able to count on the retirement you're dreaming of, take a good look at your retirement savings, with these things in mind:
- Figure out how much you'll need. Guidelines vary, but most suggest an income equivalent of between 65% and 90% of your current income. It all depends, of course, on what kind of retirement you want: Will you be doing crossword puzzles on your front porch or traveling around the globe? Once you have an estimate of the yearly income you'll need in retirement, multiply it by 25 to get a rough idea of how big a nest egg you'll want to build. An income of $50,000? Aim for $1.25 million -- adjusted for inflation, of course.
- Are you contributing enough to your IRA and/or 401(k)? Since these accounts are tax-advantaged, they can build your retirement savings more quickly than other accounts will. In 2009, you can contribute up to $5,000 to an IRA, and $6,000 if you're 50 or older. Most of us can sock between $16,500 and $22,000 into our 401(k)s.
- Are your funds invested effectively? Take a look at not only the nominal returns, but the fees you're paying your broker or mutual fund company. Even identical index funds, which track such blue-chip big boys as Chevron
(NYSE:CVX)and Cisco Systems, can have wildly different fees -- so figure out what your real returns are. If they won't get it done, consider what you might change to improve them.
And whatever you do, don't rely on your employer for your retirement. Many companies have recently reduced benefits for retirees, frozen pension plans, or suspended 401(k) matches -- surprising both retirees and current employees who were presumably counting on those funds.
Companies that have announced full or partial pension freezes include Motorola
Telling yourself your employer will be there for you when you retire might be the biggest lie of all.
The Foolish bottom line
Don't lull yourself into complacency with half-truths and unexamined hopes. If you haven't thought through how much you'll need in retirement, do so. If you don't have a plan, get one together. But whatever you do -- don't lie to yourself. When you're working long past when you thought you'd retire, you'll have only yourself to blame.
If you'd like some help figuring out what you should be aiming for -- and how to get there -- consider our Motley Fool Rule Your Retirement service. You'll get immediate access to all past issues, which feature, among other things, sample portfolios, recommended investments, and "success stories" profiling people who retired early and are willing to share their strategies. Just click here to get started -- there's no obligation to subscribe.
Longtime Fool contributor Selena Maranjian owns shares of 3M and Starbucks. Sears Holdings, Starbucks, and 3M are Motley Fool Inside Value recommendations. Starbucks and FedEx are Stock Advisor picks. The Fool owns shares of Starbucks. The Motley Fool is Fools writing for Fools.