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. 

The key to retirement?

Save more and spend less.  It may seem obvious and simple, yet many of us fail to live by these important principles, resulting in insufficient retirement savings.  Recently published in the Wall Street Journal, Kelly Greene's "The Key to Retirement: Spend Less, Save More" presents staggering statistics:

79% of 1,008 U.S. adults surveyed in February said that they have committed a money mistake – and of those, 26% reported not having saved enough for retirement as their No. 1 problem.

20% of workers saying they need to save between 20 and 29% of their income to achieve a financially secure retirement, and 23% saying they need to save 30% – or more.

Job uncertainty and making ends meet were the most pressing financial issues faced by both workers and retirees.

So how do you catch up or get ahead while you still have the opportunity?  Follow those two simple principles: save more and spend less.  Adjust your budget to live more modestly and bulk up contributions to your retirement accounts.  You'll be glad you did.

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.

Top Ten Things to Do Before Retiring

Retiring soon?  Here are some tips from Ric Edelman's "Top Ten Things to Do Before Retiring" from Inside Personal Finance:

Here’s what to do now if retirement is on your horizon.

1. Decide how you are going to spend your time. What are you going to do during the first 6 to 12 months in retirement, and what do you plan to do for the rest of your retired life?

2. Determine (realistically) how much money you will spend monthly. Remember to include periodic expenditures such as gifts, vacations, taxes, an occasional new car, and emergencies.

3. Anticipate the cost of health care. You’ll have no employer to pay this for you; Medicare, MediGap, and private insurance are all up to you.

4. Buy long-term care insurance. Now.

5. Refinance your mortgage. Many people are shocked to discover that they either cannot borrow money after they retire, or they are forced to pay higher rates.

6. Boost your cash reserves. Make sure your rainy day fund is enough to cover at least six months’ worth of expenses.

7. Evaluate your sources of income. You have already figured out what you’ll spend on a monthly basis. Now figure out where that money will come from.

8. Revise your investment strategy. The way you’ve handled your investments over the past 30 years is not how you should handle them for the next 30. While preparing for retirement, you were focused on asset accumulation. When you’re in retirement, you need to focus on income and on keeping pace with the increasing cost of living. Assets must be flexible and liquid so you can meet needs you did not anticipate. New words will enter your vocabulary: rollovers and lump sums.

9. Review your estate plan. Review your will and trust. Don’t have them? Get them. These documents can protect you and your assets while you are alive and benefit your spouse and children when you pass on.

10. Perhaps the most important thing of all. If you are not excited about retirement, then don’t. Many people quickly become bored after retiring. It’s OK -- even exciting -- to return to school or the workplace. Many do this, often in completely new fields.