As I approached age sixty-five after thirty-seven years of university teaching, I took stock of what my retirement income would look like. Many retirement experts claim that at least 70 percent of preretirement income is necessary to maintain oneâ€™s standard of living. For example, someone whose final annual income will be $100,000 should have as a goal an income of $70,000 in retirement.
I ran the numbers for my Social Security and my employerâ€™s defined-contribution plan, in which I had participated for thirty-one years. This 401(a) plan, which functions in the same way as a 401(k), had been administered at various times by TIAA, ING, and Prudential.
Together, my projected Social Security and employee retirement plan would amount to just 43.5 percent of my final income. The monthly Social Security check accounted for 19.5 percent; the annuity income option for my defined-contribution plan, 24 percent.
Something had gone terribly wrong. Despite having accumulated almost a half-million dollars, which is much more than the $125,000 average for people approaching retirement, I did not have enough to finance a retirement that would allow me and my family to maintain the middle-class standard of living that my $117,615 final salary as a university professor afforded.