Skip to comments.Study: Many Boomers Lack Retirement Fund
Posted on 07/30/2007 7:31:07 PM PDT by traumer
Study Says Nearly One-Third of Older Baby Boomers Haven't Saved Enough for Retirement
NEW YORK (AP) -- Nearly one-third of baby boomers ages 51 to 61 are at risk of not having enough in savings to finance a comfortable retirement, according to a study being released Tuesday by the Center for Retirement Research at Boston College.
With its analysis, the center has joined the national debate over how much savings is enough -- and has done so on the side that says there's a shortfall.
"We just don't believe people are saving too much," Alicia H. Munnell, a professor of management sciences at Boston College and director of the retirement research center, told The Associated Press.
A recently published academic study looked at the retirement preparedness of Americans who were in their 50s in 1992 and concluded that at least 80 percent had more than enough assets for retirement. Other scientists have argued that Americans may be saving too much.
The new Boston College study evaluated the same 51-61 age group, but looked at their finances in 2004, and found 32 percent to be "at risk" for not being able to maintain their preretirement standing of living in retirement.
The difference between the results, the center said, has to do with changes in the financial environment. For one thing, Americans now must wait until they're older than 65 to collect full Social Security benefits; meanwhile, lower interest rates mean they'll probably collect less on annuities and other investments. And many of today's workers do not have pensions like the earlier generation but must rely on worker-funded 401(k) retirement accounts, the center said.
Munnell said Americans have two choices -- to save more or to work longer.
For older people, "working just two years more ... can make a substantial difference" to retirement preparedness, she said.
"Working longer has a powerful effect because it shortens the period over which you have to support yourself and ... lets you put off tapping your 401(k) and collect higher Social Security benefits," she said.
The study was done using the center's National Retirement Risk Index, developed with funding from Nationwide Financial, the long-term savings and retirement product division of the Nationwide Mutual Insurance Co.
Keith Millner, senior vice president and head of Nationwide Financial's in-retirement division, said "there is a retirement crisis" because people are living longer, health care costs are escalating and workers aren't saving enough.
"The No. 1 issue is inertia -- people aren't doing anything," he said. "They need to get educated, get engaged."
Young workers especially can benefit from saving more because of the impact of compounding, he said.
Center for Retirement Research: http://www.bc.edu/crr
Nationwide Financial: http://www.nationwidefinancial.com
You children are really boring. And, I won't need my monthly payment when it comes in. But I'll take it and blow it all on tango lessons knowing that it twists your nipple.
What are you talking about? The FICA is 6.2% of your pay up to @ $90k. If you make $150k your FICA is only 3.5% of your pay. Mouthing off and not knowing even the basics...
Remember, smokers HELP the Soc Sec fund !LOL...
Perhaps one day you will learn how to work smart instead of hard.
I had some pretty good savings socked away in my forties. Then, after 9/11, the place I worked shut down.
It took me ten months to find a new job. I had a kid in college, but could not qualify for scholarship money because I had made too much money the year before. That had to be paid for, because you don’t want someone in their junior year with a 3.5 in engineering dropping out. (Well, maybe some freepers would make their kids drop out, but I would not.)
Guess what I lived on? Those savings. I went through most of them before finding that new job. And, no — we were not extravagant. We canceled plans for a 25th anniversary vacation and used the money for living expenses. We cut back our costs and dumped luxuries. The wife got a job and I looked after the kids. (We have two other kids, both at home then.) I worked odd jobs and consulted to bring in some extra cash.
But the week I started my new job, I emptied all but $500 out of my savings account to pay for the next month’s expenses. God knows what would have happened if I had been unemployed another two or three months — probably would have had to go deep in debt.
I am not complaining, just explaining. And only now, after five years, am I managing to build my savings up again. (We had to pay relocation expenses, and have another kid in college.) And I also know the job I have now will probably disappear before the end of 2011, and am planning to weather another storm then.
Actually my biggest fear is not having to put off retirement. I enjoy working and the job I do. My fear is ending up involuntarily retired at 55 or 56 when the current job ends. Employers are reluctant to take an “elderly” engineer — after all they will be retiring soon. (Never mind that a college recruit is just as likely to leave before five years are up.)
Assuming I am healthy, I would as soon keep working until I am 75 or so. (Why not? The work I do is fun, not physically demanding, and pays well. And I do good work.)
I can understand wanting to retire at 65 — or even 55 if you are in a dangerous, physically demanding work (puddling steel in a steel mill for example). But early retirement is unnecessary for those in an office environment.
Only contribute to your 401k up to the point of matching - not beyond.
For the remainder, invest in other venues. There are more profitable ventures than a 401 once company matching is out of the equation.
Whoa...talk about making a mountain out of a molehill...I think Proud USA’s point was that some boomers will be helped along by a high-value home. That’s it.
No, but someone in Maryland or Cali can retire to somewhere like North Carolina using that method. It doesn’t work for everyone.
So true. It has worked for me. I'm trying my hardest to get it drilled into my 3 grown kids heads. If folks would just learn to live by this one financial precept (and save the difference), many would not be in the leaky retirement boat they find themsleves in.
Every year I save & save - it just about covers my taxes. And I am not a boomer, born in ‘66. Socialism is stacked against those who play by the rules. Where’s my guv’mint tit?
Oh, working hard is bad? How about working smart and hard?.... are you a boomer?... I’m sorry.
It was the boomers who brought us a Republican congress, while their parents (the so-called greatest generation) brought us the welfare state and liberalized immigration laws.
It’s another boomer bashing thread. The bashing started in the third post.
Your saving habits are commendable. The best kind of mental discipline needed to save is not "No, you can't have an exotic vacation." Rather, "Why do you need one?"
I know I'm being preachy, but if people focus on what they can truly do without, it makes savings not only easier but more rewarding psychologically. Basically, buy what you need.
Me? I travel if I have to. If I want a new dress for the holidays, I'll buy it, without guilt. There's nothing wrong with occasionally shopping -- within a budget. But the rampant consumerism among younger people is frightening.
My folks first home is still there, and I'd bet if purchased today, the first 3 months of mortgage payments would equal what they paid for the home in 1951.
Remember LBJs Great Society, all his socialist programs? LBJ was born in the early 1900s.
LBJ was certainly no baby boomer. Fact is when LBJ was elected president, most boomers were about 10 years old.
And what about FDR, the guy who signed SS into law, among other socialist programs? FDR was no boomer. Wasn't he born in the late 1800s?
Agreed. And I don't feel the least bit guilty when I say that I want it all back, every cent that was extorted from my payroll and my husband's payroll all these years.
Actually, the root was earlier. The commies got into the gov't starting in the 1930's. Then they did a mass move with corrupting the youth in the 60's and 70's.
The boomers' parents corrupted their kids. They are mostly at fault for swallowing FDR and commie lies.
Actually, some of the boomers' got wise finally and started voting in people like Reagan and the '94 republicans.
Boomers are still learning the truth about their parents today.
But the $ave and $ave doesn’t work !
The inflation of food and gas prices... not to mention the currency exchange rate !
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.