We're Not Ready: More Bad News About Retirement

The idea of retirement in America is becoming increasingly far removed from the idyllic notion of our "golden years." For many, it's now just another source of worry, despair and resignation.

Last month, Ameriprise Financial (AMP) and Wells Fargo (WFC) each separately released ominous retirement surveys. The first reported that respondents aged 40 to 75 in the nation's largest cities were significantly less confident this year than last about their ability to retire; increased feelings of retirement-related anxiety and depression were also reported.

The second report, based on a poll of 1,500 middle-class Americans, declared that when it comes to retirement, "80 is the new 65," with 74% of middle-class respondents expecting to work past the traditional retirement age, and a quarter expecting to work until at least 80 to achieve a comfortable retirement. There was one small ray of hope in those the numbers -- 35% said they expect to work past 65 because they want to, not because they'll need to.

These days, though, even relatively sunny retirement news comes tinged with dark qualifications. A study of retiree attitudes produced by the Society of Actuaries, LIMRA and the International Foundation for Retirement Education found that although confidence was on the rise, financial planning is fundamentally inadequate: Only 45% of respondents believed that their retirement assets would need to last 20 years, the figure given by experts as the smart target. "It's clear that retirees are hoping for the best or even taking an autopilot approach," said one of the study's authors.

Now, USA Today is reporting that "more Americans are finding themselves in their 50s and 60s with practically no money saved for retirement." The last decade saw no growth in the stock market and included two bear-markets that devastated portfolios. Unemployment has been a scourge, preventing many from getting back on their feet after financial adversity. And the torpid real estate market has sucked value from people's homes, undermining their use as financial safety nets.

Jogging headlong into this confluence of horrible economic conditions is the massive Baby Boom generation, setting up a potential nightmare scenario in which the ranks of the retired are swelled by fresh millions of Americans largely unable to pay their expenses.

That danger is real. According to a survey by the Employee Benefit Research Institute, 56% of workers say they have less than $25,000 in savings. This figure is deeply distressing, given how expensive retirement promises to be: Assuming 3% inflation and a 5% annual return from investments, a 65-year-old will need to have $1.1 million saved in order to net an income of $50,000 a year in inflation-adjusted dollars.

Those who simply have insufficient savings are hardly the worst off: 42% of those polled by the EBRI said that their current level of debt is a problem.

Advice for the Far-From-Retirement Crowd

So what can younger people learn from the perilous state of those currently approaching retirement? America's twentysomethings are clearly in need of advice: In a recent survey by the PNC Financial Services Group (PNC), only 23% rated themselves as totally independent, and just 18% expressed confidence that they'll have enough money to live comfortably when it comes time to retire.

Here are some tips for members of Generation Y, an age cohort expected to be the single largest population segment by 2017:
  • Don't panic now, advises Todd Barnhart, senior vice president at PNC Bank, in a press release accompanying the study. "At a young age," Barnhart says, "time is on your side and you can take full advantage if you manage your spending, start saving and chip away at any debt." Don't waste time beating yourself up over past mistakes, which will probably make you feel more negatively about finances, increasing avoidant behavior and setting up a vicious circle of neglect and pain.
  • Don't delay. According to one financial planner cited by USA Today, many Baby Boomers got into trouble because of a dismissive attitude towards savings, which contrasts sharply with the Depression-hardened thrift of their parents. Today's young adults have plenty of incentives all around them to inspire them to start saving now.
  • Plan carefully. The most insidious danger, which can trip up even those with their eyes on the prize, is failing to plan for all the exigencies of retirement. Health care costs are skyrocketing as people are living longer -- two trends that seem likely to continue. Know how long your money will have to last; the answer is probably longer than you think.
  • Don't rely on Social Security. Already, payments from the government are failing to keep pace with inflation, and Social Security's status as an embattled entitlement makes it the opposite of a safe bet for those early in their careers. Don't lean too hard on this New Deal relic when drawing up your plan.

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Maria Buss

The book, Destination Points: A Values-Driven Journey, released recently was written in the aftermath of the financial crisis of 2008 to empower people to take care of their financial health. The topics are wrapped around real-life financial challenges that all of us face in life. If you need direction and understanding of financial/investment products that are sold to you, this is it. It is time that we take charge.

December 12 2011 at 10:21 PM Report abuse rate up rate down Reply
mount carmine

It is time to pull all USTroops out of foreign lands and bring them home. This will clear up our debt in less than two years. It is also time to cancell huff post as a red rag.

December 12 2011 at 8:50 PM Report abuse -1 rate up rate down Reply
Gregory Dunlap

I am an advisor for the State of Maryland. Reply to this post with contact information if you'd like to discuss some options to help with retirement.

December 12 2011 at 5:19 PM Report abuse rate up rate down Reply

The disputed social security tax cut is the ultimate in class war. Couples , both working at good jobs would save up to $1900. The family working at the poverty level or just above would probably save $400 to $500. What about the retirees and unemployed or disabbled who get nothing to spend,

As for the elderly being hit is the fed reserve deciding they can only earn 1% on savings which they depend on. Well we are told to go gamble it in the stock market to earn the 5% needed to keep up with the almosst 10% increase in food prices. Food price inflation is not inclluded in calculating increases in SS. Housing is included in living costs which does not help the retired because most have acquired their homes years ago. Obama to be fair should just give everyone $500, it would be fairer way to spread the wealth and skip the economic class warfare.

December 12 2011 at 9:14 AM Report abuse +1 rate up rate down Reply

Hey Huffy ! Where's all the stories about MF Global ? Oh that's right we have to keep that quiet as John Corzine is Barack and Joe's financial genius and good friend. Man there's about 1.2 billion in once taxable revenue, "poof"all gone. There's some nice retirement money for somebody.

December 08 2011 at 10:12 AM Report abuse +1 rate up rate down Reply

We can adapt to changes in economics but we can still tax the flithy rich for more Social Security!! Why stop at $100,000? Let move it up to $1,000,000. So many of us makes over $100,000 already!! My health premiums is shooting through the stratosphere !! I need more Social Security income!! every year raise... Last two years was a disater and a total betrayal!! Thorugh no fault of ours but the filthy rich's nefarious finaincial acitivities!

December 07 2011 at 5:47 PM Report abuse rate up rate down Reply
2 replies to Gumby's comment

Libs would take every cent we have and it still wouldn't be enough.

December 07 2011 at 8:59 PM Report abuse +2 rate up rate down Reply

Socialism is great until you run out of other people's money.
Gumby, you can tax the rich more and it wouldn't even put a dent in the national debt or the interest on it, as it is congresses nefarious financial activities that got us in debt in the first place.
We have a government that rewards failure and has no fiscal responsibility. The definition of insanity is repeating the same thing over and over and expecting different results.
Tell your congressional representatives to pass a law putting social security back in the lock box. Our country has a spending problem not a revenue problem.Blaming the filthy rich is just a scapegoat for this administrations failure.

December 08 2011 at 9:27 AM Report abuse +1 rate up rate down Reply

And now people are fighting to keep the payroll tax deduction from being reinacted. This payroll tax that people have enjoyed not paying is what helps fund social security.

December 07 2011 at 1:17 PM Report abuse +2 rate up rate down Reply

I'd love to be working right now, but can't even get a part-time job. There is no way I will have anywhere near 1.1 million dollars at any point in the future. Health care is going to bust me in the very near future. I'll be living on the government/taxpayers within a few years, probably.

See ya'll in line for food stamps and welfare!

December 07 2011 at 1:15 PM Report abuse +1 rate up rate down Reply

This is such a hot topic right now. So many of us are out of work or terrible under employed. For example, prior to Obama taking away all the jobs in the health insurance market, I had lot's of clients. Now, I can't even get anyone to pick up their telephone let alone have money to purchase health insurance. I am 58 years old. Who's going to hire me now? Tons of experience doesn't mean a thing in today's job market. The straight commission game is all that's left and it can't support anyone anymore. Where you used to get a draw on commission or an advance of a sale, that's all gone now. Everything is "as earned". The new agents trying to break into sales don't have a prayer of survival. Those on unemployment can see their benefits about to run out. Now they're trying to get on Disability but that's as impossible as a white man getting food stamps. I have friends out of work who would take a pizza delivery job but can't find one. I have friends that clean vacation homes for a living but have been cut way back due to this economy. No one is renting vacation homes like in the old days. Until our economy is fixed seniors will continue to suffer and have no chance at building up their retirement egg. Truly this is going to be a National disgrace and for most it's going to be a tragic ending of the senior years.

December 07 2011 at 12:53 PM Report abuse +2 rate up rate down Reply

You can p;lamn fr social security all you want to, whats ruinin git is the housing market and the regualtions being put on homeowners, thats all. I had a beautiful home, I wanted to live soemwhere else so I sold it, , I oculdn't find anything that I liked that I could afford so I came back ot my old area and tried ot find another house but now the prices were sky hig, I tried ot find another house tha tI could afford and ev erytime I did it was something else, eitygher a story aobut the regulations being placed on buyers , or else soem,horrible scenario with the EPA or the UN and the regulations, regulations I never heard of before. If you had appliances that were not energy efficient you had ot buy new ones, then it was the water, then it was the electricity and the gadget they were going ot put in to make sure you didn't use too much electricity. Come on, who in America lives like this? the UN telling us we are arrofganty lazy people, meanwhile they ar taking everything away form us to give to people who ar able bodied, including them. Perople being foreclosed on by mistake, not a fewy , thousands, not even an apology. Jefferson said if we allow banks ot run our country we will find ourselves in the street on the continent, starving and homeless, well he sure was right, I still haven't b ought a home, I can't afford ot lose what I have, You can no tbuild wealth or security without a home, I pay my whole Social security check ot pay my rent, I live on a pension, then you hear we are broke and soon won't be getting social security, o relse they want ot get rid of unions, this is where our pension comes from, a private union. We have not had a minutes peace in the last 5 years, I doubt that we will.

December 07 2011 at 12:51 PM Report abuse +1 rate up rate down Reply