No retirement for lazy savers

In the recent Wall Street Journal article "Workers Saving Too Little to Retire", Kelly Greene and Vipal Monga present survey results predicting retirement crisis for both U.S. workers and employers. 

A few facts from the article:

• Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes.
• 28% of Americans have no confidence they will have enough money to retire comfortably.
• While Americans are living longer, the extended life spans will make it tougher for workers trying to stretch retirement savings and put additional strains on pension plans.
• The percentage of workers who have saved for retirement plunged to 66% from 75% in 2009.
• Many people are struggling to make sure they don't run out of money in retirement, said Jack VanDerhei, research director at EBRI, a nonprofit in Washington, D.C.

Put simply, we suggest that if you want to live more freely and enjoy more in retirement, spend less and save more now while you still have the opportunity. 

5 must-do tasks as you near retirement

 

In his recent article titled "Nearing retirement? 5 must-do tasks," Roger Wohlner of U.S. News & World Report suggests five steps you should take in preparation for your retirement, including:

1) Take a look at all of your company benefits
2) Take a look at any pensions from current or former employers
3) Determine your Social Security benefits
4) Take stock of all of your retirement financial resources
5) Determine how much you will need from all sources to support your retirement lifestyle and compare this with your projected retirement income

To read the full article for further details, click here.

Is your pension safe?

An interesting article was published recently addressing the security of traditional pension plans.  Liz Weston's MSN Money article "Is Your Pension Safe" provides some eye-opening statistics:

•  Nearly 80% of the private pension plans covered by the Pension Benefit Guaranty Corp., or PBGC, are underfunded, to the tune of $740 billion. The news is even worse among the nation's largest companies. Only 18 defined benefit pension plans offered by companies in Standard & Poor's 500 benchmark are fully funded.

•  More than 1,400 companies shut down their pension plans in fiscal year 2011, compared with 1,200 in 2009, according to the PBGC. An additional 152 plans failed, meaning they were terminated without enough money to pay promised benefits and were taken over by the PBGC. The PBGC itself, which is funded by employer-paid insurance premiums, is running a $26 billion deficit.

•  Public pension funds are underfunded by at least $1 trillion, according to a report by the State Budget Crisis Task Force. To close the gap, 35 states have reduced pension benefits for their employees, and half have increased worker contributions to their plans, according to a report released in March by the U.S. Government Accountability Office. Three states -- Georgia, Michigan and Utah -- have implemented hybrid plans that include defined contribution plans, similar to 401k's, that shift some investment risk to workers.

•  Even fully funded retirement plans aren't exempt. General Motors, once considered the model for running a solid pension plan, shocked its salaried retirees by announcing it was offloading their pensions to Prudential Financial. About 42,000 retirees had to make the difficult decision whether to take a lump-sum settlement or trust Prudential to send them monthly checks.

Most importantly, Weston discusses what pension participants need to know to protect their benefits, some of which include personal savings in addition to the pension, the extent to which many benefits that have already been earned are protected, and the need to closely monitor the plan.  Click here to read the entire article.