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Executive savings may not support retirement life-styles.

A national survey of 1,469 executives of midsized corporations with 1,000 or fewer employees found many may be underestimating the income they will need for retirement. As a result, these executives may not be saving enough to support their anticipated life-styles.

On average, the executives polled believed they would need 60% of their final earnings to retire. Specifically, 7% said they would need 1%-25% of their final incomes to retire, 35% would need 26%-50%, 44% would need 51%-75% and 14% would need more than 75%.

However, considering projected life expectancies and inflation rates, actuaries and financial planners generally recommend 70% to 80% of final earnings for a secure retirement. Thus, the average 14% monthly savings rate reported by the executives polled may prove to be insufficient.

Allen G. Tomek, vice-president of planning for Lykes Brothers Steamship Co., Inc., New Orleans, questioned whether generalized statistical averages had a real impact on personal matters such as retirement planning. "Most people feel they are saving as much as they can. If they save more, something must go that they don't want to go," he said. "Everyone has his or her own idea of retirement, and what they decide to put away for it depends on that idea."
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Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Sep 1, 1993
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