Newspaper article THE JOURNAL RECORD

Saving for Retirement Topic a among Many Americans

Newspaper article THE JOURNAL RECORD

Saving for Retirement Topic a among Many Americans

Article excerpt

How swiftly flow the years. Twenty years after Woodstock, the generation of young people that attended the 1969 peace and rock festival are thinking about saving for retirement.

And not only that generation. According to several recent studies, saving for retirement has become Topic A among great numbers of Americans - and hopes are high. The majority of 35- to 44-year-olds hope to live well in retirement on $42,000 in annual income, according to a study by Investors Diversified Services, the financial planning firm. The 45- to 64-year-olds - called ``pre-retireds'' in the IDS survey - reckon to live well on $32,000 a year on average.

In fact, hopes are brighter than that. People want to retire early rather than waiting till 65, says a survey by Merrill Lynch, the brokerage firm. The 45-and-over folks want to kick back at 62, and the younger, 35-and-up generation aims for retirement at 60.

But with the hopes there are fears of not having enough money to live on in retirement. Younger people even worry that Social Security won't be there for them, that the government will give them only an IOU when they retire in 2019 or thereabouts.

So what's the story? Are the fears unfounded or the hopes unrealistic?

The answer is there's no reason to worry about Social Security, but whether you can save enough to live on beyond Social Security is a reasonable worry.

First, the anxiety about Social Security arises paradoxically because the system has too much money. The Social Security trust fund - which receives deductions from your paycheck - is taking in more than it has to pay out these days because active workers greatly outnumber retirees. So a big reserve, currently $169 billion, is building up for the day when today's workers retire.

Meanwhile the worries arise because that $169 billion is being invested in Treasury securities, meaning, in one sense, that Social Security funds are hiding the size of the federal deficit. But the issue is a complex and long-term one - depending on what the government spends the money on, and whether its budget moves toward balance early in the 1990s.

Meanwhile, ``the cash benefits are well financed for 75 years out,'' says Alicia Munnell, research director of the Federal Reserve Bank of Boston and author of ``The Future of Social Security.'' The reserves will keep growing until the year 2030, when they will amount to $12 trillion. And after that there is no conceivable way Social Security gets into difficulty until 2046, a year when today's 18-year old worker will be 75 years old. …

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