Talking Retirement

20% Haven’t Started to Save for Retirement

According to a new Wall Street Journal poll, while 90% of people say they plan to retire, only 80% are saving to do it. The survey also indicates that people are starting to save at a younger age.

While the mean age for beginning retirement planning is 33.3 years old, young people say they are planning for retirement earlier. The median age at which 18- to 34-year-olds begin planning is 23.6; for 35- to 44-year-olds it jumps to 29.1; for ages 45-54 it is 35.6; and for those ages 55 and older, the median is 42.8.

Read more about it here.

More About Saving Too Much for Retirement

No one can know for sure how people will fare in the future. That will depend on people’s lifespans, investment returns, inflation, the cost of housing and medical care and many other unknowns. But people have to plan as best they can despite the uncertainties.

The article then goes on to talk about the problem of saving too much.

Kotlikoff argues that if a typical household of modest means overestimates its cost of living in retirement by 10 percent, it will have to save so much that its current annual expenditures would have to be reduced by 30 percent.

There seems to be some overlap of information from the New York Times article, but it’s still worth the read. Read the article here.

The Problem With Your Retirement Planning Calculator

6 Strategies for the Retirement Savings Game

U.S. News & World Report has Take Time to Review Your Retirement Game Plan this week. The article outlines 6 strategies an American should follow when it comes to the retirement saving game.

1. Contribute to an IRA.
2. Max out your 401(k).
3. Set a retirement savings goal.
4. Examine your investment portfolio.
5. Review your Social Security statement.
6. Plan for the financial transition.

Seven Percent of Retirees are Millionaires

The article Why U.S. Insurers are Crazy Over the Retirement Savings Market, from InsuranceNewsNet, covers how insurance products will be changing to meet the needs of the wave of boomer retirees entering retirement. Basically, the insurance products out there right now can’t meet the demands of retirees and things will get better. Better products. Intense competition. Mergers in the industry.

The article also includes some interesting statistics about the financial state of retirees.

Approximately seven percent of retirees are millionaires, 19 percent have assets that are worth more than $400,000, and one-third have assets that are worth more than $200,000, and retirees today, are quite unlike retirees from previous generations.  Today’s retirees are better educated, wealthier, more active, and healthier.  They work and travel, and more often than not, they work because of their passion to continue contributing and enjoying a sense of purpose.

Read the entire article here.

Pay the Mortgage vs. Pay Your 401k.

Why You Might Already Be Saving Enough for Retirement.

According to [the contrarian economists from universities, research institutions and the government ], the financial industry, with its ostensibly objective online calculators, overstates how much money someone will need in retirement. Some, in fact, contend that financial firms have a pointed interest in persuading people to save much more than they need because the companies earn fees on managing that money.

The more realistic amount could be as little as half the typical recommendation made by Fidelity, Vanguard or any number of other financial institutions.

You might find this article very interesting. I did. Click here to read the whole thing.

Bad News for GenXers When Retirement Comes

Center for Retirement Research at Boston College released a report that that age increase for people born after 1960 might have some negative implications. “The delay in Social Security means that 60 percent of Generation Xers in the bottom third of income are at risk for being unable to maintain their standard of living in retirement.” Ouch, being a Generation Xer myself, that hurts. Read the article.

Updegrave Makes the Case for Stocks

In Goal: 12 years, $2.5 million, an article by the always-informative Walter Updegrave, there’s an intelligent argument made for keeping your portfolio mix higher on the side of stocks when planning for the long term when asked for advice.

Many people think they’ve got to ratchet their stock holdings way, way back once they hit retirement. But I’d advise against going too far, especially in your case. You and your wife have a good chance of spending 30 to 40 years in retirement. That means you’re going to need some asset growth to maintain your purchasing power in the face of inflation. It’s harder to get that asset growth if you’re invested too heavily in bonds, particularly early in retirement.

Automatically Enrolled in a 401k? Don’t Stick With the Defaults.

...A significant number of companies make principal preservation the goal for default investments. If your money has been invested only in a money market fund, for example, you’re missing out on the potential for long-term growth. Stocks (or mutual funds composed of stocks) should be a portion of every worker’s retirement cache. They may be riskier than other savings options, but over time they’ve provided the best returns to investors with years to go before retirement. Look for a low-cost equity index fund if you’re not sure where to start.

There’s more advice, like making sure to take full advantage of your company’s matching funds. Read the entire article though for the full story.

Also, check out the follow up article, Retirement and Irrational Man, Part 2, especially if you’re a little intimidated by the choices in your 401k.