A large number of U.S. workers report that they are behind in their preparations for retirement, according to a recent survey from the Employee Benefit Research Institute.
Personal finance author and philanthropist Tony Robbins has a stark warning about this trend and explains his view that catching up on saving and investing for the future begins with one simple but major step many Americans have yet to take.
Don’t miss the move: SIGN UP for TheStreet’s FREE Daily newsletter
Among current workers, 88% expect Social Security to be a major or minor source of income during their retirement years, the survey found. Most people also anticipate drawing their retirement income from sources other than monthly Social Security paychecks.
Related: Tony Robbins warns Americans on Roth IRA, 401(k) obvious problem
That is important, because the average Social Security monthly benefit for retirees of about $1,900 is usually not enough to meet people’s expectations for their desired lifestyle upon completion of their working careers.
Eighty-four percent of workers say they expect to receive income from a workplace retirement savings plan, 68% from an Individual Retirement Account (IRA) and 77% from investments and personal savings.
With those facts in mind, Robbins urges people to stop ignoring retirement savings realities and take quick action on planning for the future.
A man in retirement is seen teeing off toward the sun on a golf course. Tony Robbins explains a formula to deterimine how much money a person should expect to need after their working years.
Shutterstock
Tony Robbins has blunt words on Social Security and retirement savings
Robbins minces no words when discussing the limitations of Social Security payments when it comes to the average American’s retirement finances.
He explained his belief that those hoping Social Security will carry them through retirement are inviting “disaster.”
“Social Security was never intended to become a replacement for retirement savings, especially considering the extended length of retirement we can anticipate with longer lifespans,” Robbins wrote.
More on Tony Robbins:
Tony Robbins warns Americans on Social Security mistake to avoidPhilanthropist warns U.S. workers on retirement, Social SecurityTony Robbins has blunt words on Social Security and retirement
Robbins emphasized his major warning about retirement savings complacency and, most importantly, the need to begin preparations with some some simple mathematical calculations.
“Time to get your head out of the sand and do some easy number crunching to find out where you are and where you need to be,” he wrote. “Remember this: anticipation is the ultimate power. Losers react; leaders anticipate.”
Robbins believes that knowing specifically how much money one will need to retire is vital before one begins to craft a serious financial retirement plan.
Related: Tony Robbins warns Americans on IRAs, 401(k)s and a tax fact
Tony Robbins explains a way to calculate the money you need to retire
Robbins suggests one formula people can use to figure out the amount of money they need to achieve a practical retirement — provided the goal is to maintain their current lifestyle.
First, Robbins explains, retirement planning should be based on one’s normal spending, not how much one earns.
“If you spend more than you make, use that number — but you need to figure out how to reverse that practice,” he warns.
The philanthropist notes that many people might not know the total amount they typically spend annually, but he says it is a fairly simple behavior to track. And paying close attention can also help people cut back on spending so they can save more for retirement.
Robbins then recommends taking that yearly spending amount and mulitplying it by 20. Due to increasing longevity, he figures this is the number of years one might reasonably expect to live during retirement.
He challenges people planning for retirement to be conservative with their calculations, not unrealistically optimistic.
Of course, beyond living as they currently do, some people have more ambitious ideas about the activities they want to pursue as they imagine how they want to spend their retirement years.
“If you want to travel the world, buy a boat or upgrade your home in retirement, you need to figure out what this type of lifestyle would cost on a yearly basis and use the same process as above to calculate your savings,” Robbins wrote.
“The number you come up with may be massive — but don’t be afraid to dream big,” Robbins wrote in his characteristically encouraging style.
“With the right mindset and relentless focus, you can go beyond ‘How much do I need for retirement?’ and starting asking ‘How much do I want for retirement?'”
Related: Veteran fund manager issues dire S&P 500 warning for 2025
