He has one simple rule when planning for retirement: "If you're old enough to have sex, you're old enough to save for retirement." He outlines his ideas in his new book, "You Can Still Retire Comfortably."to read an excerpt.
"We're consumption focused, a pleasure-at-the-moment obsessed society," Stein tells The Early Show co-anchor Rene Syler. "If you start saving in your 20s, you cannot fail to be prepared for retirement. If you start saving in your 50s, you basically cannot succeed."
Stein says that traditionally retirement was thought to rest on a "three-legged stool." The three legs are Social Security, your pension and personal savings. But that approach is not a good model anymore.
What's wrong with the Social Security leg of the stool? Stein says, "We can't depend on it for retirement because...
A)In the best of times, it pays only 30 percent of the average wages;
B)The future of Social Security is tenuous at best, and it won't be able to meet the demands of future retirees
C)Inflation will eat away its value. The benefits won't be able to keep up with inflation.
Stein is equally dismayed about pensions. He notes the number of people in this country with a pension is fewer than 20 percent and that number is shrinking. He says, "A corporation's responsibility is to the shareholders, not its retirees and employees. Companies are doing everything they can to get rid of pension plans and they will succeed."
That leaves the third leg of the stool: Personal savings. "You've got to save, save, save," Stein exclaims.
So how does one know how much needs to save for retirement? Stein says, "You've got to have between 12 and 15 times of your final year's living expenses saved up. If you're spending $100,000 a year now, you should have at least $1.2 million saved up, preferably $1.5 million. If you're living on $300,000 a year, you should have close to $5 million saved up."
The good news is that it is not hard to do, he says. "You just got to start young, put it in diversified package of stocks and bonds, and stay at it. Make a plan, get a financial adviser, and stick with the plan. Don't give up on the plan."
Here are a few of his saving tips:
- Get an investment plan and save regularly. He says, "You have no reason to go to Italy and stay at an expensive hotel to have a good time. There are lots of good things you can do that are free."
- Work as long as possible. He explains, "For every additional year you work and save, you don't consume your nest-egg. You should work as long as you comfortably can. Go for it. Add as many years to your work life and that subtracts from your saving years. And, it's better for you psychologically if you keep working."
- Get and stay married. He says, "Getting a divorce is incredibly expensive. A second divorce and third divorce, and a spendthrift spouse can put you in the ground very, very quickly."