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Retirement strategies don't add up
We know we need to save more, but it seems we just haven't gotten around to it.
By HELEN HUNTLEY
Published April 11, 2007
Have you ever tried to calculate how much money you need to save for retirement? If so, you're ahead of most workers, who appear to prefer blissful ignorance. The annual Retirement Confidence Survey being released today shows once again that American workers aren't thinking ahead when it comes to retirement. Although 70 percent are confident they'll have enough money to live comfortably throughout their retirement years, only 43 percent actually have tried to calculate how much they need to save. Most - 56 percent - estimate they'll need more than $250,000, yet only 14 percent have saved that much. A startling 35 percent have saved less than $10,000. Sixty percent say they currently save for retirement. "This year we found that a substantial number of workers realize that the shift from traditional pensions to 401k plans affects them personally," but few are saving more to compensate, said Jack VanDerhei, co-author of the report from the Employee Benefit Research Institute and the survey firm Mathew Greenwald & Associates. Another finding: Social Security is misunderstood, with 51 percent thinking they'll be eligible for full benefits sooner than they will be. Many workers still think the age for full benefits is 65, but it is 66 or 67 for most of them, depending on when they were born. While 40 percent of retirees say Social Security is their largest source of income, only 14 percent of workers expect that to be true for them. A big reason people don't plan for retirement is that they have other, more pressing issues on their minds. "My strategy right now is to survive," said Mike Salistky, 55, a Palm Harbor bookseller. "Costs are going up and up, and incomes are not going up. It's just too hard to save." He said, however, that he does hope to come up with a plan for saving. "It's never too early to start planning," said Gregory Rosica, a partner with Ernst & Young in Tampa. He said for younger people, doing a financial plan helps provide motivation to save, even though the assumptions used about investment returns and inflation might be off base. As you get closer to retirement, the numbers become more accurate. "You can look at it and see, realistically, here's what I have and here's what we're living on and what our expenses are," he said. Another study released Tuesday found that two-thirds of baby boomers know they haven't saved enough for retirement, but many of them aren't doing anything about it. Scottrade said Tuesday that its survey of 45- to 64-year-olds found 29 percent had saved less than $25,000 for retirement. If you'd like to do some financial planning yourself, go to www.choosetosave.org for budgeting, retirement planning and other financial calculators. Helen Huntley can be reached at hhuntley@sptimes.com or (727) 893-8230. Who is saving and how much Reported total savings and investments among those providing responses, by age, not including the value of a primary residence or defined benefit plans. |
| All workers | Ages 25-34 | Ages 35-44 | Ages 45-54 | Ages 55+ | All retirees | | Less than $10,000 | 35% | 50% | 36% | 24% | 26% | 32% | | $10,000-$24,999 | 13% | 18% | 16% | 10% | 5% | 13% | | $25,000-$49,000 | 10% | 9% | 10% | 11% | 9% | 10% | | $50,0000-$99.999 | 13% | 10% | 14% | 15% | 11% | 12% | | $100,000-$149,000 | 8% | 7% | 7% | 9% | 11% | 8% | | $150,000-$249,000 | 7% | 1% | 9% | 10% | 9% | 12% | | $250,000-$499,999 | 7% | 1% | 4% | 12% | 11% | 5% | | $500,000 or more | 7% | 4% | 4% | 9% | 17% | 9% | | Source: Employees Benefit Research Institute and Mathew Greenwald & Associates Inc., 2007 Retirement Confidence Survey. |
[Last modified April 11, 2007, 23:54:26]
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by Dennis
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04/20/07 09:33 AM
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James, I agree people spend too much on unimportant things. However, wages in Florida ARE too low. Compared to many other areas, we are a low-wage state, yet with mid-to-high cost of living, housing, etc.
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by diana
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04/11/07 09:13 PM
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to youngsters: cut up your credit cards for sure! pay them off or pay the total each month.make your car last, do repairs. you don't need a new car every 4 years or so. rent movies and bring your lunch to work.
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by Sal
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04/11/07 04:04 PM
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The times are changing and many Americans will not be able to support themselves in their elderly years. I predict that institutions will be created to house and feed them. Kind of like the ophanages of days past...
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by James
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04/11/07 03:58 PM
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it's not that wages are too low, it's that people NEED to spend $100-150/month on cable, etc. I hope they enjoy get used to the taste of dog food!
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by Holly
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04/11/07 03:54 PM
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I am 46 and I know NOT to depend on the government; I have my own Roth IRA! It's a scary reality and we need to be teaching our children NOW to plan ahead. FYI - my parents never taught us the value of saving! It's shameful!
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by Adrian
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04/11/07 01:32 PM
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Those who fail to plan, plan to fail. The failure of the educational system to teach the basics of financial planning & investing is evident. Pay yourself first, spend less than you earn and invest. Let time & compounding work for you.
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by Bland
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04/11/07 01:11 PM
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I wonder how these people will pay their property taxes in the future?
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by Bob
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04/11/07 09:32 AM
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Most Americans will be faced with two choices. 1) Continue to work past the traditional retirement age, or 2) Dramatically reduce their standard of living. My mother works part time and I send her money every month to support her meager lifestyle.
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by workerbee
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04/11/07 09:06 AM
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Instead of lecturing people on what they already know, why don't acknowledge that wages are so low that most people are living paycheck to paycheck, and saving is impossible.
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by linda
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04/11/07 08:42 AM
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I'm saving just for that rainy day, nevermind retirement. Things will be way too expensive I would rather be gone from this planet than live on the streets. And thats where a lot of the country will be if prices keep rising and pay is very low
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