Burden of Retirement Saving Falls Heavily on Workers
Today, Usa, Tribune-Review/Pittsburgh Tribune-Review
Retirement planning is a whole new world when compared with the reliable three-legged stool that the World War II generation relied on.
"They had Social Security, pension plans and personal savings," says Robert Krakower, a financial planner and author of Redefining Retirement for a New Generation. "They would stop working and have guaranteed income."
The risk has shifted to individuals at a time when we are living longer. People of all ages and stages in life find that retirement planning is more complicated.
We worry about higher health care costs as we try to figure out how to make our retirement nest eggs last longer. And young workers worry that they can no longer count on much support from Social Security.
"It will be a minor player because benefits will go down, and the benefit age will go up," Krakower says.
Sometimes unexpected changes in life force us to start thinking about our future. Seven years ago Donna Addy, who has worked in travel and marketing, was living with her family in Maryland, when she unexpectedly became a widow at age 48.
She first met with a financial planner to get a road map. She will receive full spousal retirement benefits, with health care and profit-sharing, from her husband's job at Procter & Gamble.
She next considered how to re-invent herself and how to bring more purpose into her life. She waited until her son graduated from high school and packed up and moved to Boca Raton, Fla. At age 55, she happily works for a senior living center. And she has a list of other things she would like to eventually do, including an invention that she is working on and a women's workshop series that she wants to create.
"To me the term retirement feels static and antiquated," she says. "I am living my dream."
Where to start: Savings
Addy is embracing her future. Too often, people put their heads in the sand and don't start saving for retirement soon enough. It especially seems too far away for young people to worry about.
"We're not good at imagining our future in the long term," says Laura Carstensen, director of the Stanford Center on Longevity. "Many go into a denial stage. That doesn't mean they are slackers. They're trying to make ends meet. They are constantly faced with dilemmas that seem impossible."
Now that retirement rests on the shoulders of workers, they want better advice.
"As humans, we decide how we are supposed to act by watching the crowd," Carstensen says. For retirement many look at what their parents have done and don't realize that everything has changed. People need a new infrastructure that helps them know what to do and makes it automatic and invisible and a little bit at a time, she says.
The recession has shaken people up and made retirement planning even more difficult.
No wonder many people are now saving less than they can and should, says Mike Alfred, co-founder and CEO of BrightScope, a provider of independent retirement plan ratings and investment research.
"That is the No. 1 retirement issue," Alfred says.
Both women and men are underfunded for retirement, but women have less, according to a survey released this month by Wells Fargo.
And about 30 percent of women 40 to 69 cannot estimate how much of their retirement savings they will need to withdraw annually in retirement, the survey says.
As complicated as retirement planning seems, unless you have a pension plan, you have three basic things to do:
You can try to increase your retirement savings by earning more money, spending less money and investing assets in a more efficient manner so you get a better return, says Michael Kay, a financial adviser in Livingston, N.J.
Most common mistakes
Unfortunately, it's often easier to ignore retirement and focus on more immediate needs. …