The Employee Benefits Research Institute (ERBI) has just released their latest Retirement Confidence Survey. Some of the findings are both disturbing and encouraging at the same time.
Disturbing because almost 30% of those surveyed have less than $1,000 in savings and assets. More than 50% reported that the total value of their household savings and investments, excluding the value of their primary home and defined benefit plans, is less than $25,000. That means that they have less than $25,000 to fall back on in the event of an emergency. If they have that emergency, they will more than likely increase debt and/or dip into their retirement savings, (most likely incurring penalties), in order to survive. Add to that the survey’s findings that 45% of current retirees say they retired early because of health problems, disability, or economic change, and you understand why it might be important to seek qualified professional help. Little or no nest egg and forced early retirement equals troubles. More troubling is that only 23% said they obtained investment advice from a fee-only professional financial advisor. I should point out that the higher the income, the more likely workers and retirees were to seek fee-only advice.
What’s the encouraging part? These dismal financial situations are changing the way Americans are thinking about retirement. The New Normal is causing workers to think about retiring later. No longer do they dream of retiring at 55, withdrawing 10% of their investment a year, and asking for a 25% return from the market. More and more, workers are planning on retiring at 65 or later. I actually had a friend who is verging on retirement age (65) say to me that (he) could almost double his (retirement) income if he waited until age 70 (to retire). He was factoring in an increased pension and added social security benefit for him and his wife.
You can see the changes happening. There is a metamorphosis in retirement thinking. Americans are starting to save more, and spend less. They are finally starting to think about tomorrow and not just today. This was reiterated in the ERBI’s special advertising section of the Wall Street Journal on April 5th, 2011 – Workers Are Waking Up to “The New Normal”. For me, and for Dallas Salisbury, president and CEO of the Employee Benefits Research Institute (ERBI), THAT is encouraging.
(For more on social security, check out my post When Should You Take Social Security.)
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