David Lerner Associates : Slowing Down in Retirement May Not Be an Option
“The answers provide a snapshot of just how prepared Americans are for retirement,” says David Lerner Associates Branch Manager John Koene. “While many Americans have long viewed 65 as the traditional retirement age, it seems that many of today’s workers expect to work well into their golden years.”
In the survey, 25 percent of respondents said they will “need to work until at least age 80” to live comfortably in retirement. And nearly three-fourths (74 percent) expect to keep on working in their retirement years.
“To be fair, not everyone who plans to work past age 65 is doing it just to pay their bills,” notes Koene. Some 35 percent of those surveyed say they'll keep working because they want to.”
The reasons for delaying retirement are varied—everything from the general demise of employer paid defined-benefit pension plans to stock market swings and the erosion of savings during the 2008-2009 recession. But, on average, Americans have only saved 7 percent of the retirement nest egg they were hoping to build, according to the survey.
“The ultimate goal for many people is to save enough money so that they can retire when they choose—and have enough money to last them through retirement,” Koene says. “But because of the growing gap between what they’ve saved and what they hope to save, some Americans are scrapping the idea of retiring at a specific age.”
In the survey, middle-class Americans said they will work as long as it takes to save up enough money to live comfortably in retirement. Three-fourths said it is more important to have a specific amount saved before retirement, regardless of age. By contrast, just 20 percent said it is more important to retire at a specific age, regardless of savings.
“It’s somewhat eye-opening that the median goal respondents wanted to reach in their retirement savings was $350,000,” says Koene. “But, in reality, $25,000 was the median retirement savings for this group.”
Fortunately, strategies exist for individuals to start saving for their retirement early in life, as well as for late-starters to catch up. These include participating in an employer’s 401(k) or other retirement plan and/or establishing their own Individual Retirement Account (IRA). Special “catch-up provisions” even allow individuals age 50 and over to make additional IRA contributions each year.
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