The Center for Retirement Research at Boston College has released a new report that suggests even more serious problems ahead for future retirees.

The news “is truly alarming,” writes the report’s author Alicia H. Munnell, the director of the Center for Retirement Research at Boston College and the Peter F. Drucker Professor of Management Sciences at Boston College’s Carroll School of Management.

(Click here to read this column on Forbes.com)

Munnell begins her report with this: “People often ask how baby boomers compare with their parents in terms of being prepared for retirement. The easiest way to answer that question is to look at the ratio of wealth to income from the 2010 Survey of Consumer Finances (SCF), the Federal Reserve’s comprehensive triennial survey of household wealth in the United States, and compare it to earlier surveys.”

She did.

What she found was a “sharp drop” in the ratios of wealth to income for each age group reported in the 2010 SCF.

A the same time, as we all should know by now, the need for wealth has increased due to the several factors–people are living longer, 401(k) plans have replaced defined benefit plans, health care costs have increased, and real interest rates have declined.

“As a result, for any given level of income, one would have expected workers to accumulate more wealth in order to support themselves over their longer period in retirement,” she writes.

Not so.

The world has changed significantly, and we can’t afford to ignore it.

The only answer, as far as I can tell, is–we need to work longer and save more.

If you’re alarmed like Munnell clearly is, and I am, here’s what I recommend you do straightaway.

Catch-up retirement savings. As I wrote recently in my NextAvenue.orgcolumn, if you’re in your 50s and 60s, take advantage of the “catch up” rules for 401(k) plans, which let participants 50 and older invest up to $5,500 more in 2012 than those under 50, with a maximum contribution of $22,500. (If you’re 50 or older, you can also invest an extra $1,000 in a traditional IRA or Roth IRA, boosting the regular $5,000 limit to $6,000.)

Run the numbers. Studies have shown that people who estimate their future financial needs save more than those who don’t.  Get started by using the online calculator, The Ballpark E$timate, from the Employee Benefit Research Institute’s site, choosetosave.org.

Next Avenue also has a useful, easy tool called How Much to Save to Reach Your Financial Goals. It helps you figure out the amount of money you need to put away each year to ensure a comfortable retirement.

Learn about personal financeIf you lack confidence about your ability to invest wisely, do something about it. You can pick-up the basics by attending a personal finance course at a community college or by enrolling in investment seminars sponsored by a nonpartisan group like the American Association of Individual Investors. The National Endowment for Financial Education’sSmartaboutmoney.org has gratis guides that give details on stocks, bonds and mutual funds.

 Find an adviser to work with. I opt for fee-only financial planners who don’t make their money from commissions on products that they sell to you. Look for one with the Certified Financial Planner designation, awarded by the nonprofit Certified Financial Planner Board of Standards.

Three national groups of financial planners offer searchable databases to find someone near you: The National Association of Personal Financial AdvisorsThe Financial Planning Association andThe Certified Financial Planner Board of Standards.

I’m the author of What’s Next? Follow Your Passion and Find Your Dream Job, available here www.kerryhannon.com. I am a MetLife Foundation Journalists in Aging fellow. To learn about great jobs for retirees, check out my column at AARP. My weekly column  at PBS’s NextAvenue.org is here. Follow me on Twitter, @KerryHannon


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