Thirteen percent of working adults think they will never be
able to afford to retire, according to a new survey. What' more, on average,
most of us figure we’ll work until age 68. In other words, a large number of
Americans are significantly overestimating how much time they have to
financially prepare for retirement.
The Northwestern Mutual 2014 Planning and Progress Study,
which queried more than 2,000 adults representing a weighted cross-section of
the population by age, gender, race/ethnicity, education and income, finds that
too many people are relying on staying in the workforce longer to help fund
their retirement--and that doesn't always happen.
Other organizations, such as the Employee Benefits Research
Institute (EBRI) have found a similar pattern, with pre-retirees planning to
remain in the workplace longer than current retirees say they actually
did.
Out of Your Control
Life have a way of disrupting the best-laid plans. In addition
to physical issues that crop up with age, business and economic conditions can
derail intentions to keep working.
If you were among the millions laid off in the recent “Great
Recession” and age 55 or older, you had a high probability of not finding re-employment.
The desire to spend more time with family- due to the arrival of grandchildren
or the failing health of your spouse- can also result in retiring sooner than
originally planned.
There is a very high probability you will not defy the odds
and that, for one reason or another, you have less time to work and save than
you think you do. Rebekah Barsch, VP at Northwestern Mutual, suggests a better
approach is to save as if you plan to retire at age 59.
Younger Boomers in
La-La Land
Barsch is most concerned about those age 40-59, the second
half of the baby boomer generation. This age group is the least disciplined and
least interested in planning for retirement, according to the survey, citing
such factors as lack of time, having too many distractions and the complexity
involved in creating a nest egg. Rather than be a source of helpful
information, the internet appears to have caused information overload for many,
leading to paralysis.
Though the majority admit their financial planning could use
improvement, the survey shows, more than half describe themselves as “informal”
planners or someone who has no retirement plan at all.
Guess Who’s Better at
Saving?
The impact of the recent financial crisis had “an amazing”
impact on today’s young adults, according to Barsch. Millennials are also more
likely to describe themselves as “disciplined” in their approach to financial
planning.
Given their age, millennials are also surprisingly
conservative when it comes to their financial planning. One-third favor a “slow
and steady” approach over being gung-ho risk-takers. Having witnessed the
unpredictability of the economy, millennials also appreciate the need to insure
against the risk of losing your job or becoming sick and unable to work.
It’s Never Too Late
Whether you are in your 20s or 50s, if projecting expenses
and determining asset allocations and insurance coverage isn’t your idea of how
to spend a fun weekend, find a professional advisor who will do the work for
you.
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