Marc Daner, stationed in Alpharetta as Wells Fargo Managing Director of Investments, said it’s never too late to begin saving or investing for retirement.
“Most of the people I see are in their 50s,” he said. “Most of the time, people who feel they are way behind are not as bad off as they think.”
The first step to find out is getting a plan in place, financial counselors can help. A plan provides benchmarks and goals, so you can see where you are and what you have to do.
There are tools available, such as “catch-up” provisions for a 401(k), which lets older workers contribute more to retirement accounts and keep the tax-free advantages.
If you are thinking of retiring and beginning to draw Social Security, get a part-time or other job rather than retire early. He estimated about one-third of his clients prefer to continue working past retirement age, one-third would like to retire, and one-third want to work part-time or take a “dream job” that may not pay much, but was something they always wanted to do.
Continuing to work has advantages, especially if you lose a long-held job prior to your Social Security retirement age (starting at 66 for most older workers). It provides a financial bridge to reaching retirement age (those who take Social Security checks who are less than 66 get smaller checks for life). Also putting off that first collection date even longer means your checks will be bigger for life.
“A lot of people know if you take Social Security early you’ll take a 30 percent haircut on it,” Daner said. “But if you start taking it late, you get more. For example, if you take it after you are 70, you get 132 percent of what you get at retirement age.”
Here are ways Wells Fargo suggests to boost savings.
1. Pinch now, spend later. Maximize contributions to retirement plans such as a 401(k). You avoid taxes, and many employers match some contributions. You can set aside a maximum of $17,500 in your 401(k), 403(b), or 457 plan. You can play catch up by putting in as much as $5,500 more if you’re 50 or older.
If you are self-employed, open a a Simplified Employee Pension (SEP IRA), or an individual 401(k).
2. Open an Individual Retirement Account. Traditional IRA or Roth IRA contribution limits are $5,500. With the Roth, you pay tax going in, but in retirement you withdraw the money tax-free. That can put you in a lower tax bracket.
3. Use a good, old-fashioned savings account. You will need more than your company plan provides.
4. Consider investing in stocks. Women tend to pick safe investments like money market accounts and CDs, which don’t lose money. That can be a mistake if investing long-term for your retirement — even if you have less than 20 years to go. Don’t be overly aggressive since investors don’t have as much time to recover from market drops as someone in her thirties.
5. Keep tabs on your portfolio. Based on factors such as your age and risk tolerance, check your mix at least every six months. As stock and bond values fluctuate, you might have to tweak your account to rebalance it.
6. Set a savings goal. Having a savings target to aim for is a motivator. Gather up financial records: your current 401(k) and bank statements, your estimated Social Security benefit and your projected pension payout. Use the retirement estimators on many bank websites to see where you stand.
A recent Transamerica Center for Retirement Studies survey showed:
•Fewer than one in 10 baby boomers feel they are building a sufficient nest egg.
•58 percent plan to work after they retire.
•43 percent plan to work past 70 or never retire.
•Only 19 percent have a backup plan if forced to retire earlier than planned.
•60 percent have a retirement strategy, but only 12 percent have it written down.
Wells Fargo polled 300 Georgians of all ages in November 2013 and released these findings in February.
•Two in five have no written financial plan or a budget.
•Four in five Georgians had a physical checkup with a doctor in the last year; but only two in five conducted a financial review.
•Three in five don’t feel financially healthy about having enough for kids’ education, savings or for enough for fun.
•Three in five do not feel well about their ability to retire comfortably.
•A bright spot: In 2012, half of Georgians were living paycheck to paycheck. That was down to 43 percent in 2013.
A comfortable retirement is becoming more elusive for aging Americans, many of whom will have no choice but to work well into their post-Social Security years.
Sparse savings, fewer companies offering pension plans, longer life-expectancy, stagnant home values and rising health-care costs mean many of the 70 million-plus baby boomers will struggle to live as well as their parents did in old age. The National Institute on Retirement Security says “some 92 percent of working households do not meet conservative retirement savings targets for their age and income.”
The National Retirement Risk Index, maintained by the Center for Retirement Research at Boston College, says 53 percent of American households in 2010 were “at risk” of not having enough money to maintain their living standards in retirement.
“For the first half of that baby boomer wave, their situation may be manageable. In many cases they’ll have an employer-sponsored pension,” said William Wood, a senior lecturer and director for Ohio’s Wright State University financial services program. “The last half are really the ones that are going to have significant issues. The statistics are more than unsettling.”
Wood suggests people save 10 percent of their income for retirement, but studies show one-third of the workforce has no savings set aside.
“It’s a very severe problem,” said Tony Webb, a research economist for the Boston College school’s retirement center.
“If you have a person in their 40s who hasn’t saved a cent, there is no conceivable savings rate that will give them a decent income in retirement, if they choose to retire at current retirement ages.”
Much of the squeeze on would-be retirees is because of a lack of savings, some of which is because boomers are the “sandwich generation,” said Marc Daner of Alpharetta, the managing director of investments at Wells Fargo. They are caught between still paying for late-born children while also taking care of aging parents, including taking on some of the parents’ expenses.
As a result, many baby boomers — who are reaching retirement age at a rate of 10,000 per day — have no choice but to keep working.
Bureau of Labor statistics show that from 1995 to 2007, the number of older workers on full-time work schedules nearly doubled while the number working part-time rose 19 percent.
Wright State’s Wood said a recent study by Fidelity found that 75 percent of individuals in the 55-to-64 age bracket have less than $30,000 in 401(k) retirement accounts.
“For a lot of people, 401(k) plans are not working well. Only about 80 percent of those eligible actually sign up,” Boston College’s Webb said. “Then they have to save enough. The typical contribution rate of 6 percent of salary plus a 50 percent employer match is really not adequate.”
“Then the employee has to have the discipline to not take out the money, but lots of people have life crises along the way and break the nest egg.”
The Social Security Administration says 51 percent of Americans do not have access to private pensions, and for 35 percent of retirees, Social Security is the lone source of income.
“The last half of that baby boom wave will face something that’s unique to their circumstance, and that’s poverty,” Wood said. “They’re going to rely on Social Security and will quickly go through whatever IRA and 401(k) money they have. They’ll be essentially down to Social Security, which was never intended to be a living wage.”
And those banking on being Social Security-dependent face more bad news. At the current rate of spending, the trust fund is on pace to run dry in 20 years.
“For a significant percentage of people, their attitude is ‘something will happen, some government program will be invented that will save me from myself,’ ” Wood said. “The government can’t afford that. Even if there were a will, they simply won’t be able to afford that going forward.”
Part of the reason is that there are 3.3 workers putting money into the system for every Social Security recipient. By 2040 there will be 2.1 workers to every retiree.
Emma Stauffer of Kettering, Ohio, retired 28 years ago after a 30-year career with General Motors. Her husband, now deceased, worked for the U.S. Postal Service for 40 years.
She is 75 and doing OK because she and her husband saved money.
“You have to start early; we tried to teach our children that,” Stauffer said. “Since I’ve been retired there’s been a lot of cuts to our health care and prescriptions. I’m not in poverty or anything, but I’ve had to trim back. You have to expect the unexpected.”
Christopher Quinn contributed to this article
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