And 3 things you should do about it
9 Findings from the Retirement Planning Survey
by Gary Foreman
Will Boomers Have Enough to Retire?
Fine with a Small Salary?
A Tool to Determine the Best Time to Take Social Security Benefits
The Employee Benefit Research Institute recently came out with their 2013 Retirement Confidence Survey. There are a number of interesting findings, especially for baby boomers and those thinking of retirement.
For instance, current workers' confidence in their ability to pay for basic expenses in retirement has dropped dramatically since 2007. At that time, 40 percent were very confident. Today only 16 percent are that sure.
Or consider workers confidence that they're doing a good job of preparing for retirement. In 2006, only 12 percent said "not at all." By 2013, that number had grown to 28 percent.
Workers also are expecting to work longer. Twenty years ago, fully 50 percent planned to retire before age 65. Today less than 1 in 4 expect to retire that young.
At the same time, half of those who are retiring report that it's happening sooner than they had planned. Fifty percent say it's due to health issues and another 21 percent cite the loss of their jobs.
There's also a big difference between workers and current retirees in their dependence on Social Security. Fully 69 percent of existing retirees say SS is a major source of their income. Only 14 percent of today's workers expect SS to play the same role for them.
The recession also appears to be affecting the number of workers who have money saved for retirement. Back in 2009, 75 percent said they had savings. Today that number has dropped 66 percent. The assumption would be that they consumed money saved for retirement for current expenses.
Age makes a difference in retirement savings, too. Workers between the ages of 35 and 54 are just as likely to be saving money as their counterparts 10 years ago. But among younger workers aged 25 to 34 the number saving for retirement has dropped from 70 percent to 55 percent. It was not cited in the study, but rising student loans could be a reason.
The amount saved could fall far short of what they'll need in retirement. Fully 60 percent report that they and their spouses have saved less than $25,000 for retirement (excluding their home and defined benefit pension plans). About half of them have saved less than $1,000!
Finally, less than half of the workers surveyed have done a calculation on how much money they'll need at retirement. Not surprisingly those who have done a calculation are more likely to have a higher target for savings.
So what can you do with this information? If you're among the 50+ percent that haven't calculated what you'll need for retirement, do it. The National Association of Personal Financial Advisors can point you to a fee only planner who can help with the calculation. Or you can use one of the many online calculators. A popular one is on the AARP site.
Next, create a savings plan that will get you to your retirement savings goal. Again, you'll want to use a fee only planner or online calculator to know how much you'll need to save each year.
Then make retirement savings part of your regular budget. It's not an afterthought. Something that you'll do only if you have money left over. Cut other expenses or seek another source of income if necessary.
Saving for retirement is not an option. According to the Social Security trustees, there are currently 2.7 people working for each person collecting benefits. And that ratio is gradually going down. So unless you're already up in years or plan on living in poverty, it's important to have and execute a retirement savings plan that's not totally dependent on Social Security.
Debt is preventing me from saving as much for retirement as I should be! Tell us: Yes, debt is hindering my ability to save for retirement! or No, debt is not a problem but I'd love to discover more ways to save as I head into retirement!
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter or visit Gary Foreman on Google+. Gary is also available for audio, video or print interviews. For more info see his media page.
Take the Next Step:
- You've learned how to work smarter, not harder. After 50 Finances is a weekly newsletter dedicated to people just like you. Subscribe and start saving today! Subscribers get a FREE copy of our After 50 Finances Pre-Retirement Checklist that lists everything you need to do to be ready for retirement.
- Visit our Baby Boomers on a budget Pinterest board for more money saving ideas.
- If you're over 50 your financial needs are different. And so are your questions. You'll find information geared specifically for Baby Boomers on The Dollar Stretcher section dedicated to their financial issues.
Share your thoughts about this article with the editor
Baby Boomer Tools & Resources
More Baby Boomer Articles
- How you can still get more money from Social Security
- Why you should think twice before downsizing to a mobile home in retirement
- A widow's guide to managing money on your own
- 6 ways to pay less tax, keep more retirement money
- Teachers' retirement options
- 6 ways boomers can help grandkids pay for college
- Low cost home security tactics