CCCS Recommends A Retirement Reality Check

MILFORD — Twenty-four percent of American workers are very confident and 44 percent are somewhat confident they will have enough money to live comfortably throughout their retirement years, as reported in the Employee Benefit Research Institute’s 2004 Retirement Confidence Survey.

It is difficult, however, to determine on what workers are basing their confidence. The RCS reports that 45 percent of all workers have less than $25,000 in retirement savings and investments, not including the value of their primary residence. Additionally, one-third of workers ages 45–54, and four in 10 ages 55 and older, are not currently saving for retirement.

“The Retirement Confidence Survey results point out a disconnect between how some workers perceive their retirement savings situation and the reality of it,” said Steve Bucci, president, Consumer Credit Counseling Service of Southern New England (CCCS). “Many workers are not able to work as long as they plan to due to illness, disability or job loss, and still others put off saving for retirement and end up with not enough in savings to meet basic expenses.”

To help workers realistically access their retirement savings goals, CCCS offers the following retirement reality check to common misperceptions:

I plan to work long past the usual retirement age. More than half of workers expect to work to age 65 or older or continue to work after retirement. In actuality the average retiree retired at age 62, reports the 2004 RCS. In addition, more than 30 percent left the work force earlier than planned due to unexpected evens such as health problems or company downsizing.

I won’t need that much money to live comfortably in retirement. A low expectation of how much you will need to retire is very common. Many reported they thought they would need 50 to 70 percent of their preretirement income in retirement. Of the RCS respondents currently retired, however, 39 percent stated their current income was about the same as their preretirement income. Financial experts agree that 70 to 80 percent of preretirement income is needed to live comfortably in retirement.

I will not need to make any changes in my current lifestyle in retirement. Even if you manage to save enough for retirement that your income is sufficient, it is likely that you will need to make slight changes in your lifestyle. Your income will not go as far by the time you retire, and many will continue in retirement for 15 to 20 years or more.

There is no need to calculate now what I will need to retire. The only way to determine if you need to make changes in your retirement planning is to calculate your retirement needs. Fifty-seven percent of RCS respondents started saving more after a retirement needs calculation.

I am too young to worry about saving for retirement. Almost half of workers ages 25–34 are not currently saving for retirement, the RCS reports. The longer you wait to begin a retirement plan, the more of your income it will take to reach the needed level of retirement savings. Uncomfortable changes in lifestyle may be required if you wait too long.

CCCS recommends workers realistically evaluate their retirement planning strategies and make changes as needed. For professional help with budgeting and debt issues contact CCCS at 800-208-2227.

CCCS is a nonprofit and a certified housing counseling agency with offices in Massachusetts, Connecticut, and Rhode Island. Connecticut offices are located in Cromwell, Danbury, East Hartford, Groton, Milford, Norwich, and Stamford. CCCS is accredited by the Council on Accreditation of Services for Families and Children, Inc, and is a member of the National Foundation for Credit Counseling (NFCC).