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  • Archive for the ‘Delaying Retirement’ Category

    The Kids Are All Right. But How Are You?

    Monday, August 25th, 2014
    Summer is winding down, and it’s often a time of change. Each year, many of us watch as our children go off to school and college. This change is big, not only for the kids, but also for the parents.  In addition to the emotional aspects and changes to the daily family routine, it can also mean a big change for your family finances as well.

     

    For the past several years, Sallie Mae has put out a study, “How America Pays for College,” to examine the decisions and funding sources that go into paying for a child’s college education in the United States. The 2013 report  found that average costs of college in 2012-2013 was $21,178. Parents paid 27% of that cost, close to $6,000.

     

    The difference between what you have saved for your kid’s college, and what it actually costs, can be large. This gap can lead parents to make some poor financial decisions. For example, this year’s Sallie Mae report found that one out of 10 parents said they are planning to tap into their retirement funds to help pay for the cost of college. While this may solve the immediate problem, it could lead to many more problems down the road if you have to turn to your kids to help support you in retirement.

     

    If your child has just graduated from high school or college, you may be sighing with relief because she has found a job, and you can start putting the money you were giving to her directly into your savings and retirement accounts. But, if your child is like 36% of 18 to 31 year olds in the US, she is still living at home, and likely unemployed.

     

    With these realities, it can be tough to continue to save for retirement.  But it is important to keep saving.  Start by keeping the basics in mind, set moderate goals, and work to achieve them.  Here are three steps and ideas:

     

    1. Saving a little is a big step! Start saving today, with whatever amount you can. Putting small amounts away for many years will add up.  Work on putting 10-15% of your income into your retirement account every month. That is a large goal, and one you can build up to. You can also help yourself by helping your children. Get them started on saving now, so they will ask less from you later. WISER has 5 saving tips for young people that can get you started.

     

    2. Find creative ways to reduce everyday expenses. Get a small notebook and Piggy Banktrack everything you spend money on for 3 months. Then identify patterns that you can change. For example, if you see that you buy two cups of coffee every day, only buy one, and put the money you were using for the second up into your retirement savings. Other ways to reduce your expenses might include driving less and walking more, or taking more public transportation. Remember to utilize public resources, such as your local library, where you can check out movies, tools, and books for free, and your local recreation center, where you can often swim or exercise much more cheaply than at private, membership facilities. Take a look at some of our previous blogs on budgeting to help you find ways to cut expenses.

     

    3. Plan to work longer. Retirement age isn’t what it used to be; people now live longer and are healthier longer. Put off retirement a little longer so that you can continue to save money for an extra few years. If you can, wait to start collecting Social Security after age 65, not before, in order to maximize your Social Security benefits. Learn more about how your benefits can increase.

     

    Wanting to help your kids financially is noble, but it comes with trade-offs.  You don’t want to support them financially to the detriment of your own retirement savings. The 2013 Sallie Mae report found that the largest source of college funding actually came from grants and scholarships. So make sure to look into all the different funding sources that are available for college, and make your retirement account off limits.  If you want more information about how much money different colleges will cost, check out the Consumer Financial Protection Bureau’s Paying for College  website, which has lots of information and handy guides to help you better understand your options.

    Not confident about your retirement? You’re not alone!

    Friday, March 18th, 2011

    Popular culture paints an image of retirement as one’s “golden years” spent walking on a beach and playing golf. Sadly, for most Americans, the thought of retirement actually makes them feel anything but relaxed.  Results from the 21st annual Retirement Confidence Survey (RCS), conducted by the nonpartisan Employee Benefit Research Institute (EBRI), show that workers’ pessimism about their retirement is actually deepening. It seems that many of us believe that a comfortable retirement (and definitely that sandy beach!) may not be in our future.

    Some key findings from this survey show that…

    • – More than a quarter (27 percent) of workers now say they are “not at all confident” about retirement, up 5 percentage points from the level measured just one year ago.
    • – The percentage of workers saying they are “very confident” of a comfortable retirement ties with 2009 at 13 percent—the lowest rate ever measured by the RCS.
    • – A third of all Americans (34 percent of workers, 33 percent or retirees) say they had to tap an IRA, 401(k), savings or investment accounts, or had to take a loan against those accounts, in order to pay for basic expenses. However, those who had retirement savings accounts—such as 401(k)s and IRAs—were far less likely to tap their savings than those who did not have these accounts.
    • – The RCS continues to find that many people do not plan or save for retirement. While 59 percent of all workers say they are currently saving for retirement, more than half (56 percent) say they have less than $25,000 in savings and investments, excluding the value of their primary residence and any defined benefit (pension) plans.
    • – A significant number of workers (20 percent) say they now intend to retire later (at an older age) than they had planned. Of those who say they will retire later,  the main reason cited was the poor economy (36 percent), a lack of faith in Social Security or the government (16 percent), a change in employment situation (15 percent), or because they can’t afford to retire (13 percent).
    • – About a third (31 percent) of workers say they will need less than $250,000 to afford a comfortable retirement.
    • – Yet almost half (45 percent) are not too or not at all confident they and their spouse will be able to save as much as they think they need, and 70 percent say they are a little or a lot behind schedule in planning and saving for retirement.
    • – Well over a third (42 percent) say they determined their retirement savings needs by guessing.

    While these results reflect the negative economic and financial climate today, it is never too late to makes changes that can boost your savings and build your confidence for retirement.

    WISER has many helpful tools and fact sheets to put you on the road to a confident retirement today:

    To see the full survey report, visit EBRI’s website at http://www.ebri.org/surveys/rcs/2011/

    · A third of all Americans (34 percent of workers, 33 percent or retirees) say they had to tap an IRA, 401(k), savings or investment accounts, or had to take a loan against those accounts, in order to pay for basic expenses. However, those who had retirement savings accounts—such as 401(k)s and IRAs—were far less likely to tap their savings than those who did not have these accounts.

    Shine A Light on Retirement

    Monday, August 4th, 2008

    Happy belated birthday Mick Jagger! Rock legend and boomer icon Mick Jagger turned 65 on July 26th. But how does the Stones front man measure up when compared to the average 65 year old?

    Surprisingly, Sir Mick is following current retirement trends, though perhaps for somewhat different reasons. Jagger, as well as almost-65 year old fellow Glimmer Twin Keith Richards, have no plans to end their lucrative careers. These recent film stars have plans to continue recording new and old tracks with their longtime recording company, Universal Music Group.

    Many potential retirees are choosing to remain in the workforce after they turn 65. Though these workers won’t be selling out packed arenas, they may be greatly improving their retirement outlook. A recent analysis by a federal agency, the Congressional Budget Office (CBO) points out that delaying retirement by even a few years can substantially improve the financial outlook for those who have a savings shortfall. According to the CBO, working a few years longer while also saving more income has several important effects:

    • It shortens the number of years of retirement and reduces the total funds you will need.
    • It allows funds already invested to continue to grow and gain in value.

    By delaying Social Security benefits, there is an increase in the overall benefit amount, making a big difference for moderate earners.

    The oldest boomers will be able to collect:

    • 75% of normal benefits at age 62.
    • 100% or the full benefit if they wait until age 66.
    • 132% or the full benefit plus an extra one-third if they wait until age 70.

    According to a poll of independent advisers conducted by Curian Capital LLC, “Forty percent (of advisers) said the biggest threat to clients’ retirement income plan was lack of sufficient time to build wealth.” If you want that early retirement but need some extra savings, the Stones said it best: You can’t always get what you want. But (pardon the impending pun) think about spending a few more years in the workforce, and you just might find, you’ll get what you need .

    WISER

    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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