Half of Americans say they aren’t contributing to a retirement plan, but more specifically 56% of Americans ages 18-34 are more likely to be among those not saving, according to a recent LIMRA survey.
“The findings from this survey were disturbing,” says Matthew Drinkwater, associate managing director, LIMRA Retirement Research. “Given that people will increasingly need to rely on their personal savings to make ends meet in retirement.”
He adds it was also troubling to see that a “larger portion of younger Americans — who are less likely to have a defined benefit plan — are not saving for retirement in IRAs or defined contribution plans. In order to have the adequate savings necessary to meet their financial needs in retirement, which could last 20 or more years, it is critical that these individuals begin saving systematically early in their working years.”
A quarter of all Americans and less than a third of Americans older than age 50 work with a financial professional to plan for retirement. However, those who do are more likely to be contributing to a defined contribution plan or IRA.
The findings suggest that financial professionals can have a positive influence on their clients’ saving behavior, with 70% of respondents saying financial professionals recommended how much they should save for retirement.
Younger and higher-income consumers are more likely to consider contributing to an IRA in the next year. But nearly half of all consumers say they are not planning to contribute to an IRA because they could not afford to do so.
“In the long run,” says Drinkwater, “ these individuals would benefit if they made even modest contributions to a pre-tax savings plan that could accumulate until retirement.”
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Posted by: Felicia E | May 16, 2012 2:07 PM
With the high unemployment/underemployment rate among recent college graduates and the daunting amount of student loan debt, this is more than just the 'young immortals' not planning well, or a flood of information. It's about having the actual dollars to save. It's not impossible, but having a steady income and having debts that aren't overwhelming are key to this making sense to the age group cited. Also - once these younger workers are on their feet, there needs to be some education around 'need' versus 'want'. The cultural reinforces getting the latest techn device or toy almost as if it's essential for life. Teaching good decision-making,sound consumer concepts, and educating the young to know about the 'spin' that's placed around 'stuff' would also help to frame expectations and habits. Saving for retirement is just not as gratifying or 'sexy' as a big screen HDTV. This is a learned perspective that needs challenging before we see positive savings outcomes.
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Posted by: Raymond | May 16, 2012 1:23 PM
Retirement is essential. We are living longer and there are many ways to invest and save. The challenge is the consumer is overwhelmed with information and confused, in dential, will listen to friends, family, and acquaintances.There is the internet which provides infinite information. It is no always correct but there is information available.What to do:a. Talk to financial professionals b. Read books -- Motely Fool and other books which offer information c. Attend webinairs and seminars on investing d. Ask for referrals and meet with people who will help you.
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Posted by: Jim Lawson | May 15, 2012 1:24 PM
People with financial advisors are more likely to contribute because the advisors, who are typically commission based, do their damndest to convince people to contribute. The truth is that the defined benefit plan began a major downfall due to Ronald Reagan's 1986 Tax Reform Act. Congress desperately needs to reverse that law to make defined benefit plans a viable option for large employers. They are still a viable option for many small employers but since many financial planners are not well versed in defined benefit plans, their clients are not informed of the true benefits of these plans.
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