The television images show us beautiful white sands, couples dancing on the beach, and smiling faces as the voice-over says something like, “You deserve the great retirement you want, and the Fabulous Investment Company can help you dance your way into your golden years.”
However, that picture isn’t what half of Americans are thinking about when considering retirement: they’re anxious, wondering if they’ll have the money want for their retirement.
A March, 2017 survey conducted of 1,018 people by Harris Poll for the American Institute of Certified Public Accountants (AICPA) showed that just under half of non-retired adults, 49%, aren’t sure they’ll have the money they need for retirement.
Only 5% of those surveyed believe they’d saved enough for retirement. That indicates that some level of anxiety exists within each economic level, not just those in the lower economic strata. Uncontrollable factors dominated the concerns of people concerned about their retirement resources. These issues are, with percentages indicating respondents’ greatest concerns:
- Health care uncertainty, 71%;
- Social Security uncertainty, 62%;
- Tax rate uncertainty, 52%;
- Retirement planning difficulty, 54%;
- Anxious about determining how much money they’d need, 70%.
Retirees surveyed said their three significant sources of retirement income were Social Security (61%); pension plans (36%); and savings accounts (25%).
In contrast, 48% of non-retired respondents said they would rely less on Social Security than do their retired counterparts. Only 17% listed pensions within their two income sources; 39% cited personal savings, considerably higher than retired survey respondents.
The question is, are they actually doing something to ensure those numbers will be valid when retirement occurs?
The more anxiousness that swirls around issues over which people feel they have little or no control puts a premium on taking charge of the things in their lives over which they can exert influence: savings, spending, and investment, though unexpected factors can influence any or all of these three.
We can’t predict our future health conditions or what the government might do with tax rates. Nevertheless, being either unconcerned about retirement or anxious over the future without doing something to change either situation is like being on a sinking ship within reach of a lifeboat and not moving to climb on board.
At one time in American life defined-benefit pension plans were the brass retirement ring; however, today private sector pension systems are declining or disappearing. The government sector continues to use defined-benefit plans, but the future may change that arrangement as well.
Saving – now – is crucial. So is investing, along with wise saving.
Regardless of your financial position, talk to an investment professional. If your employer offers a retirement program of any kind, participate. There are many types of plans, among them tax-free on withdrawal and tax-deferred. Study the differences.
Social Security’s retirement planner online tool is an excellent way to start this process or to see where you stand right now: https://www.ssa.gov/planners/retire/.
Planning for retirement is a bit like a line from the movie Apollo 13, when the flight director says to his team about the damaged spacecraft, “Work the problem, people. Let’s not make things worse by guessing.”
Don’t guess about retirement, plan. You’ll have a much better chance of dancing on the beach.
Random thought: One simple word of advice to folks might be to suggest that every time someone gets a raise, they should use as much of it as possible (at least half) and increase their contribution to their employee-sponsored retirement plan, until such time they maximize their allowable contribution. After that, start saving it.
This post originally appeared on the Knoxville News Sentinel.
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