|By Kevin Smith, Daily News, Los Angeles|
It's what most of us work our entire lives for — the day when we can step off the treadmill and leave the traffic jams and long work days behind.
Some envision it as a time to finally take that trip to
It all sounds great, but here's the rub: The average working household has virtually no retirement savings. In fact, when all households are included — not just those with retirement accounts — the median retirement account balance for all working-age households is just
The institute's report, "The Retirement Savings Crisis: Is It Worse Than We Think?" also reveals that near-retirement households aren't faring much better. Their median retirement account balance is
Two-thirds of working households age 55 to 64 with at least one earner have retirement savings less than one times their annual income — far below what they will need to maintain their standard of living in retirement.
All told, working households are collectively
Those numbers don't surprise
"Many people are underestimating what kind of savings they'll have to put into their accounts," Ciceri said. "The relevant question should be, 'How can I maximize my contribution every month to get to my goal?' They are underestimating what they're going to need."
Needless to say, millions of Americans are concerned about their retirement security — and for good reason.
Private sector employers have shifted away from traditional defined-benefit pensions, which provide a stable source of income that lasts through retirement and are managed by professionals.
Instead, most private sector employees with workplace retirement plans must now rely on defined-contribution, individual-investment accounts, such as 401(k) plans. And those were designed to supplement — rather than replace — defined-benefit pensions.
Now the risk and much of the funding burden falls on employees, who often have difficulty contributing enough on their own and who typically lack investment expertise.
"Up until about 10 years ago it was very common for big corporations to have pension plans," Ciceri said. "But those defined pension plans pretty much got wiped out. Today it's mostly government workers that have those kinds of plans. The big corporations have changed to 401(k) plans."
The problem, according to Ciceri, is that many workers are not sinking nearly enough into those savings plans.
"A lot of investment portfolios got wiped out after 2008 and 2009 and many middle-class people are living paycheck to paycheck," he said. "They're only putting
"It was a staff reduction," she said. "The company is based in
Her retirement savings have eroded as a result.
Lynch said her balance still exceeds the
Independent retirement adviser
Many are eager to retire as early as possible and others fear
But if you're counting on those benefits as part of your income, you should wait until you're eligible for the full amount, Marriage said. That's age 66 if you were born from 1943 to 1954, and age 67 if you were born in 1960 or later.
If you're in the older group, retiring at 62 cuts your benefits by a quarter. For the younger group, it's nearly a third.
"Chances are, you'll be better off mentally and physically if you wait anyway," Marriage said. "Many studies show that people live longer and are more vital the longer they remain employed."
The average monthly retirement benefit in June of this year was
If they live to age 90, that's a total of
The Federal Reserve's drive to keep interest rates low has also eaten into investors' portfolios.
"If you have CDs, bonds or treasuries you're only getting 1 to 2 percent at best," Ciceri said. "A lot of people are struggling with the idea of how much additional risk they are willing to take on, given that interest rates are so low."
The typical working American household needs to replace roughly 85 percent of its pre-retirement income to maintain its current standard of living in retirement, according to the NIRS report. That rate probably seems high to many. But it doesn't even account for medical costs, which can escalate rapidly during retirement.
"The hope of retirement security is out of reach for many Americans in the face of a crumbling retirement infrastructure," the NIRS report concluded. "The 'American Dream' of retiring after a lifetime of work will be long delayed, if not impossible, for many."
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|Source:||McClatchy-Tribune Information Services|