Employees Worry about Retiring Comfortably

September 2nd, 2008 at 09:30am John Schissel

  John D. Schissel, QPA, CPC 

A recent survey conducted by the Employee Benefit Research Institute indicates workers are less confident about having enough money to retire confidently. The tattered economy, the housing struggles, rising health care and the looming deficits with the Social Security and Medicare systems have shaken the view of the future. 

The survey reported the largest one year drop in confidence in its 18 year history. 

“The good news is that after years of false optimism, at least active workers are beginning to realize that their current level of retirement savings appears to be inadequate for living comfortably throughout their retirement years” said Jack VanDerhei, co-author and Temple professor. 

Nearly half of the survey participants had total savings and investments-minus the value of their primary residence and defined benefit plans-of less than $50,000. 

As the number of defined benefit pension plans (employer paid plans which provide a fixed lifetime, monthly benefit) steadily decline, the main retirement income resource has become the 401(k) plan. Typically the employer will match a portion of the amount a participant saves in the plan.Unlike the defined benefit plans which typically cover all employees, the 401(k) plans are voluntary and many employees do not save which can jeopardizes their retirement future. Up to 30% of eligible participants do not save anything.  

In less than 10 years the annual contributions received by Social Security will be less than promised annual benefits. Projected solutions include greater contributions, less benefits or a combination. This will only make the  financial situation more difficult for the unprepared. 

There is not better time than the present to consider increasing your annual contributions to your 401k, 403b or 457 plan.  Even a small increase can make a difference.  It may make the difference between a stressful and truly rewarding retirement.

Entry Filed under: Retirement, Retirement Planning