Quantcast

Retirement savings: Too little too late?

Compiled by Michael DeGroote

For the Deseret News

Published: Friday, May 4 2012 9:25 a.m. MDT

Shutterstock.com

Enlarge photo»

LONDON — A new survey by Prudential says people in the UK who want to retire this year are looking forward to traveling the world (36 percent) or enjoying themselves (43 percent). Only 5 percent plan to spend anything on charity.

But the top priority seems to be a prerequisite for their dreams: "Prudential has revealed the results of new research which shows the top priority for people intending to retire this year is saving money to ensure they have enough to live on in retirement. Nearly 6 out of 10 people (57 percent) said saving will be a top priority," the press release said.

"Today's retirees are likely to spend longer in retirement than previous generations," Vince Smith-Hughes, retirement income expert at Prudential, said in the survey press release, "so it is encouraging to see that they understand the importance of saving money to ensure they can live comfortably. Saving shouldn't be regarded as something that suddenly stops once you retire, and the current generation of retirees seems to be more aware of this than ever before."

But for many in the U.S., retirement may just be a pipe dream.

CNN Money featured an article titled "Delaying retirement: 80 is the new 65." About a quarter of middle-class Americans have so little savings that they are planning to delay their retirement until they are at least 80 years old.

Eighty years old is two years longer than average life expectancy — meaning that many people are working to save enough money to die some day.

"It sounds depressing, but for many it's a necessity," the CNN article said. "On average, Americans have only saved a mere 7 percent of the retirement nest egg they were hoping to build, according to Wells Fargo's latest retirement survey that polled 1,500 middle-class Americans."

People had a median savings of about $25,000. Their median goal was $350,000.

Clive Crook, a Bloomberg View columnist, said Americans' problem is not Social Security solvency, but that it won't be enough to retire on. "When they retire, many baby boomers will see a far bigger drop in their standard of living than they had expected," he said. "Many will have to work longer, whether they want to or not."

Joe Udo at U.S.News & World Report admits saving for retirement is difficult. "Why should I save when I can spend my money now?" he said. "I can use the money to buy new clothes, tickets to shows, eat out and many other fun things. There are many practical and emotional reasons why we should opt for delayed gratification and squirrel a portion of our paycheck away in 401(k) and other retirement accounts. If you think saving is tough now, just think how much harder it will be when you're 65 years old."

Choose to Save, a program of the Employee Benefit Research Institute, gives several reasons to save before retirement:

Because you don't want to work forever, and you will ultimately be responsible for paying for your retirement.

Because you want to have enough money saved for a comfortable retirement.

Because you don't know how long you will be able to work.

Because you don't know how long you will live.

For people who are wondering where they might stand on the savings road to retirement, Kiplinger has a retirement savings calculator at Kiplinger.com/tools.

"Saving as much money as possible, from as early an age as possible," said Smith-Hughes at Prudential, "is the best way to ensure you can afford a comfortable lifestyle in retirement."

EMAIL: mdegroote@desnews.com TWITTER: @degroote FACEBOOK: facebook.com/madegroote

Get The Deseret News Everywhere

Subscribe

Mobile

RSS