For many workers, retirement seems an ethereal, distant eventuality that doesn’t require much thought. Don’t you believe it. It comes and it comes sooner than most Americans are ready for it.
According to a USA Today article, about a third of Americans have less than $1,000 in savings and investments to fund their retirement, aside from a home and defined benefit plans such as pensions. Fifty-seven percent say they have less then $25,000 set aside for retirement, a survey taken by the Employee Benefit Research Institute and Greenwald and Associations noted. Their research results match those generated by other researchers.
Many pin their hopes for a financially secure retirement on working beyond the usual retirement age. But, again, the research shows that isn’t realistic. Some 50 percent of workers leave the workplace before retirement age, 60 percent of that number because of health problems and 27 percent because the nature of their work conditions has changed. Their company has downsized or closed entirely in many instances. Only 23 percent of retirees actually report having continued to work for pay.
Things don’t always work out. It’s better to save now than to rely on nebulous chances to work longer later, the experts advise. How many years you are eligible for a retirement plan through your work is one of the best indictors of how well you will fare financially after retirement.
In the EBRI survey, only 14 percent of those questioned said they felt secure about retirement. They had retirement plans. Conversely, 44 percent who had no retirement plans were concerned about the ability to adequately prepare for retirement.
Many workers simply fail to think about retirement at all. Fewer than half of those surveyed said they and/or their spouses had tried to calculate how much money they would have at retirement. The greatest excuses for failing to save is the cost of living and day-to-day expenses. Debt also is a factor, with 51 percent indicating they had a problem with the level of debt they had incurred. Almost 70 percent of those surveyed said they thought they could save an additional $25 per week more than they currently are doing, but they would have to sacrifice something, such as meals out, to do it. They were advised that the additional savings would amount to some $1,300 a year. But you can’t wait until retirement is imminent to do it.
Bottom line, the experts advise, is living within your means and starting to save early. Ignoring the potential problems until it’s too late serves no purpose. Many financial institutions offer help in calculating what your saving should be to assure a comfortable retirement. The alternative is to plan on spending much less than you earned on the job, live largely on Social Security and seeing savings dwindle quickly after you retire.
