Americans unprepared for retirement

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COX NEWS SERVICE

Most Americans are not saving enough for retirement and have unrealistic expectations about how much they will need, a study released yesterday by the Employee Benefit Research Institute found.

In its annual Retirement Confidence Survey, the group reported that while most workers expect to live long and comfortably after they retire, far fewer have taken the necessary steps.

Of 1,252 workers surveyed nationwide, roughly 60 percent said they expect their living standards after they retire to be the same or better than in their working years. But nearly the same number conceded they had not mapped out how much savings they will need to do so. All are ages 25 or older and currently employed.

More than half of the respondents said they have saved less than $25,000 for retirement, while just 23 percent have saved more than $100,000. Still, about two-thirds said they are confident they will have enough to retire comfortably.

Researchers said the inflated hopes are based on outmoded expectations for employee retirement packages, which are quickly becoming a thing of the past. Many modern workers may not realize that the benefits given to previous generations probably won't be there when they retire.

"A lot of today's workers look at today's retirees and say, 'They seem to be in good shape, and I'm making more than Mom and Dad were making, so I should be in good shape, too,'" said Jack VanDerhei, a professor at Temple University and co-author of the study. "What they're totally failing to realize is that the generation of people retired today by and large had benefit plans and retiree health plans that are being increasingly cut back today."

The study reported that 40 percent of workers said they had secured a definite retirement plan from their current employer, yet 61 percent said they expect to receive one by the time they retire.

The findings also show that Americans expect to live longer than previous generations, increasing the savings they will need to retire on time. Two-thirds said they believe they have some chance of living to age 90, or 25 years past the traditional retirement age of 65.

Experts say the effect could be a greater number of Americans working into their golden years. Gary Burtless, a senior fellow for economic studies at the nonpartisan Brookings Institution in Washington, said the average retirement age has been rising since the mid-1980s, accelerating in just the past decade.

"My suspicion is that that will continue," Mr. Burtless said.

"People are leaving the work force at a later age nowadays than was the case five years ago, 10 years ago and 20 years ago," Mr. Burtless said, adding that at least some of the work force is postponing the age at which they give up earned income.

Mr. VanDerhei said that if Americans are going to lead the kind of retirements they expect, they have to start planning now.

"It's going to be a good 10 to 15 years into the baby-boom generation of retirement that it's finally going to hit people that this is no longer a sure thing, and they'll have to start planning," he said. "Hopefully, they'll figure that out when there's still time to do something."