Jean Chatzky Warns Retirees Against Judging 401(k) and IRA Savings by Longevity From Birth

Former NBC "Today" show financial editor Jean Chatzky is warning Americans about a danger in how they view retirement savings, in her new book, "The Forever Paycheck," according to TheStreet.
Chatzky wrote that looking at longevity from birth is "a very dangerous thing to do, at least financially." Average life expectancy has risen from roughly 68 in 1950 to about 77.5 today, and those numbers can convince people they are fine if they have saved enough to reach 80. Instead, she said, people should look at longevity from retirement.
Chatzky said the creators of the post-pension retirement system urged people to save but gave no proven blueprint for withdrawing the money. Moving from saving to spending can also trigger fear of mismanaging or running out of funds. Once an employee's last day of work is set, all contributions, including matching funds and payroll deductions, stop. Retirees can leave the money in the 401(k), roll it into an IRA, or cash out, which she says to avoid. Penalty-free distributions can begin at 59½.
Other points cited in the article:
- Fidelity suggests saving 10 times final salary to retire at 67, and 14 times to retire at 62.
- Delaying Social Security past 62 raises the monthly payout by 8% for each year, up to age 70, according to the Social Security Administration.
- Boston College's Center for Retirement Research found that men who worked longer saw their mortality rate in their 60s fall from about 8% to 6%.
Chatzky's solution is a "Forever Paycheck Plan," which she describes as a set of instructions that assesses where you are today and manages the future perpetually. She said the time to start building it is now.