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Many Americans Can’t Face Planning for Retirement 
 

3/25/2008  By Kathy Gurchiek 
 
 

Numbers play a big part in Americans’ sense of identity—their birthday or that of a loved one, wedding anniversary, phone number, Social Security number—but few like to think about the number of dollars they will need in retirement, according to recent findings.

A majority of the 1,008 adults surveyed do sometimes or often think about financially related numbers—their checking account balance; the amount currently in their savings and investments; their paycheck or Social Security check; the amount they’ll need to save or invest to live through retirement; the balance on their credit cards, loans or mortgage.

But close to half (42 percent) don’t like thinking about how much they’ll need to retire, and 39 percent say it’s just too boring to think about, the January 2008 phone survey for ING found.

It’s no wonder retirement planning is a subject some would prefer to avoid. The buying power of typical workers is shrinking at an accelerating rate, says the Economic Policy Institute, citing February 2008 numbers from the U.S. Bureau of Labor Statistics. Buying power fell 1.4 percent in January, the EPI noted, compared to steady real growth of 2.0 percent in 2007.

Then there’s the worry of stretching the paycheck for here-and-now priorities. Paying off debt is the greatest financial priority for a growing number of workers—from 18 percent who cited this in 2007 to 32 percent in 2008, according to the recent Ninth Annual Transamerica Retirement Survey of 2,011 full-time workers.

Kathleen Murphy, CEO of U.S. Wealth Management for ING, finds it ironic that birthdays top the list of most important numbers for Americans.

“As people live longer and celebrate more birthdays, they also face a greater risk of outliving their retirement savings,” she said in a press release.

“We hope identifying and working towards one’s retirement number,” Murphy said, “will be as important as achieving each additional birthday.”

Looking Ahead

Age, education and tenure in the workforce influence a person’s thinking about how much money he or she will need to retire, and it’s a topic more likely to be considered by those ages 35 to 54, college-educated and working full time (75 percent, 71 percent and 75 percent, respectively), ING’s survey found.

Thirty percent completely agree and 25 percent somewhat agree that they already have calculated how much money they’ll need for retirement, but 36 percent said the best they can do is guess on a dollar amount.

Making those calculations is not easy, nearly half of those surveyed said, and they’re not sure where to start.

Living expenses was cited most often as the factor people thought they needed to consider when figuring out how much savings and investments they’ll need to retire.

Only a few listed factors such as life expectancy (7 percent), assets such as their home (6 percent) or their health, health care costs or the age at which they retire (all 5 percent).

Health care costs are a planning consideration. A 65-year-old couple retiring in 2008, for example, will need about $225,000 to cover medical costs, according to new data from Fidelity Investments.

That’s a 4.7 percent increase over Fidelity’s 2007 estimate of $215,000 and does not include health-related expenses such as over-the-counter medications, most dental services and long-term care. It assumes individuals do not have employer-sponsored retiree health care coverage.

But while Americans might not feel that they have a clue about how to plan for retirement, a majority are open to getting assistance from multiple sources, the ING survey found.

Eighty percent would turn to a financial adviser, followed by accountants (73 percent) and friends or family (68 percent). Sixty-four percent said retirement seminars would be helpful, and 63 percent would use an online financial calculator.

Kathy Gurchiek is associate editor for HR News. She can be reached at kgurchiek@shrm.org.


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