Do We Have Retirement Crisis?

by Galia Gichon on March 28, 2013

I recently read about a report in the Wall Street Journal that made me stop and think about how these numbers could “scare” us enough to make positive changes for our personal financial picture. Just the last few weeks I have met with many clients who had decent incomes but NOTHING saved for retirement. Do not let these numbers scare you but instead motivate you to do more or take an action step forward.

SAVINGS DOWN SINCE 2008
57% of US Workers have $25,000 or LESS saved. This is down higher from 49% in 2008, according to a recent Employee Benefit Research Institute study. Do we have a crisis? Not to scare you but when I see savings go down, I do get nervous. The savings number should be increased considering that the S&P 500 has provided an annualized 5.62% return for the last 5 years! Plus 66% of us are saving for retirement compared to 75% back in 2009.

LOWER CONFIDENCE
Plus 28% of Americans have NO confidence their retirement savings will be enough for them. This is the highest level in at least 23 years. Knowing your numbers and looking at them annually is a key factor to increasing your confidence. Don’t ignore it.

WE ARE LIVING LONGER
While this is wonderful news to spend this time with our family and loved ones, it is not such great news for our wallets. Women who reach 65 are expected to live an additional 22.7 years, up from 21.3.

WHAT CAN YOU DO?

1) Get a checkup every year.  I work with so many people who are middle class and are able to save more money in this economic environment.

2) Put as much money as you can in tax-deferred accounts.  The harder it is to touch, the harder it is to take out!

3) Fill out an online retirement calculator every year.  My favorite one these days is Fidelity My Plan.

4) Re-run your retirement numbers with a longer life span so they are more realistic.  Again, it may not be the best news but it paints the practical picture.

5) Prioritize your expenses.  I worked with client today that came down to choosing trips versus eating out a few times a week.  She couldn’t do both and save the way she wanted to.  I didn’t tell her to give up on both but pick one so she could still save accordingly.  What is your priority?

 

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