{"id":2134,"date":"2012-09-12T22:36:18","date_gmt":"2012-09-13T02:36:18","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=2134"},"modified":"2012-09-12T22:36:18","modified_gmt":"2012-09-13T02:36:18","slug":"future-retirees-the-news-is-alarming","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=2134","title":{"rendered":"Future Retirees, The News Is Alarming"},"content":{"rendered":"

\"\"<\/a>Ouch.<\/p>\n

The Center for Retirement Research at Boston College has released a\u00a0new report<\/a>\u00a0that suggests even more serious problems ahead for future retirees.<\/p>\n

The news \u201cis truly alarming,\u201d writes the report\u2019s 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\u2019s Carroll School of Management.<\/p>\n

(Click here to read this column on Forbes.com)<\/a><\/p>\n

Munnell begins her report with this: \u201cPeople 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\u2019s comprehensive triennial survey of household wealth in the United States, and compare it to earlier surveys.\u201d<\/p>\n

She did.<\/p>\n

What she found was a \u201csharp drop\u201d in the ratios of wealth to income for each age group reported in the 2010 SCF.<\/p>\n

A the same time, as we all should know by now, the need for wealth has increased due to the several factors\u2013people are living longer, 401(k) plans have replaced defined benefit plans, health care costs have increased, and real interest rates have declined.<\/p>\n

\u201cAs 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,\u201d she writes.<\/p>\n

Not so.<\/p>\n

The world has changed significantly, and we can\u2019t afford to ignore it.<\/p>\n

The only answer, as far as I can tell, is\u2013we need to work longer and save more.<\/p>\n

If you\u2019re alarmed like Munnell clearly is, and I am, here\u2019s what I recommend you do straightaway.<\/p>\n

Catch-up retirement savings.<\/strong>\u00a0As I wrote recently in my NextAvenue.orgcolumn<\/a>, if you\u2019re in your 50s and 60s, take advantage of the\u00a0\u201ccatch up\u201d<\/a>\u00a0rules 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\u2019re 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.)<\/p>\n

Run the numbers.<\/strong>\u00a0Studies have shown that people who estimate their future financial needs save more than those who don\u2019t. \u00a0Get started by using the online calculator, The Ballpark E$timate, from the Employee Benefit Research Institute\u2019s site,\u00a0choosetosave.org<\/a>.<\/p>\n

Next Avenue also has a useful, easy tool\u00a0called How Much to Save to Reach Your Financial Goals.<\/a>\u00a0It helps you figure out the amount of money you need to put away each year to ensure a comfortable retirement.<\/p>\n

Learn about personal finance.\u00a0<\/strong>If you lack confidence about your ability to invest wisely, do something about it.\u00a0<\/strong>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\u00a0American Association of Individual Investors.<\/a>\u00a0The National Endowment for Financial Education\u2019sSmartaboutmoney.org<\/a>\u00a0has gratis guides that give details on stocks, bonds and mutual funds.<\/p>\n

\u00a0<\/strong>Find an adviser to work with<\/strong>. I opt for fee-only financial planners who don\u2019t 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.<\/p>\n

Three national groups of financial planners offer searchable databases to find someone near you:\u00a0The National Association of Personal Financial Advisors<\/a>,\u00a0The Financial Planning Association<\/a>\u00a0andThe Certified Financial Planner Board of Standards<\/a>.<\/p>\n

\"\"<\/a>I\u2019m\u00a0the author of\u00a0What\u2019s Next? Follow Your Passion and Find Your Dream Job<\/a>, available here\u00a0www.kerryhannon.com<\/a>. I am a\u00a0MetLife\u00a0Foundation Journalists in Aging fellow. To learn about great jobs for retirees, check out my\u00a0column\u00a0<\/a>at\u00a0AARP. My weekly column \u00a0at PBS\u2019s NextAvenue.org is\u00a0here<\/a>. Follow me on Twitter,\u00a0@KerryHannon<\/a><\/p>\n

 <\/p>\n

More Forbes fun:<\/p>\n

\"\"<\/a>Older Workers Staying On The Job<\/a>\"KerryKerry Hannon<\/strong>Contributor<\/a><\/cite><\/div>\n
\"\"<\/a>Paying for Your “Working” Retirement Education Before You Retire<\/a>\"KerryKerry Hannon<\/strong>Contributor<\/a><\/cite><\/div>\n
\"\"<\/a>The Big Career Shift: Your Financial Checklist<\/a>\"KerryKerry Hannon<\/strong>Contributor<\/a><\/cite><\/div>\n
\"Share<\/a>