Monday, December 03, 2012

Retirement in Tatters

Many Americans are no longer planning to retire. A new survey of workers aged 18 or older finds a substantial 43 percent planning to work past age 70 or not retire at all. The 54 percent majority say they will continue to work even after retirement. And 65 percent do not have a back-up plan if they find themselves unable to work before their planned retirement, according to the report by Transamerica Center for Retirement Studies.

Retirement has become an elusive dream because of the disappearance of traditional, defined-benefit pensions. Only 16 percent of employers now fund these guaranteed income streams for retirees. Most employers now offer cheaper (for them) and less dependable (for retirees) defined-contribution retirement savings plans, which require workers to save for their own retirement. Not surprisingly, the average worker falls far short of saving enough. In 2012, households headed by baby boomers had a median of $99,320 in total retirement savings (not counting Social Security benefits). Gen Xers had $41,821, and Millennials had $15,213. Since the average householder aged 65 or older spends about $38,000 a year, it becomes clear why so many Americans are giving up on retirement.

Source: Transamerica Center for Retirement Studies, Weathering the Economic Storm: Retirement Plans in the United States, 2007-2012

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