I think that I’ve just heard enough about the Ka-boomers (my name for the baby boomer generation because we are like a ticking time bomb) retirement shortfalls being referred to as a retirement funding gap. For many Americans, their retirement savings shortfall is not a gap it is an absolute and utter chasm! Can you say the size of the Grand Canyon?
Just the Facts
Why do I say that the retirement savings shortfall is a chasm? I will refrain from writing a litany of whys and I will try to limit myself to 3 salient points.
• 47% of Americans do not know how much money they will need to support themselves in retirement -just dandy! Let’s close our eyes and when we open them maybe the problem will have solved itself. If you don’t know how much you’ll need, how can you know how much to save for retirement?
• The savings rate for America over the last 20 to 30 years has been around 3%-5%.
And, a couple of years ago we even had a negative savings rate. Tell me how can you have a negative savings rate?
Also, how can you fund a decent retirement by saving just a few pennies on the dollar? That is if you even leave it in your retirement account. For some reason, we Americans feel like our necessities include like a fancy cars, speedboats, 4 wheelers, vacations, clothing and more pairs of shoes then a millipede could wear! I digress…
• For those Americans over age 55, 51% have saved less than $50,000. And, 58% have saved less than $100,000. With the median income around $50,000 per year, even $100,000 doesn’t sound like enough to fund a 15 to 20 year retirement for two people.
Quit living on credit. Pay you credit cards in full every month. Defer gratification. Curb your need ‘to have to have’ more things. And, give the consumer (you) a rest from excessive spending.
Take care of your personal economy. Let another segment of the economy pull us out of recession. I think the American consumer needs to fuel his/her own financial security by saving more, more, more.
Jane Nowak is a Financial Planner with Kring Financial Management located in Atlanta, Ga. Jane’s practice focuses on Women’s Retirement Planning and Financial Planning for Women. Her articles have been published on line at NASDAQ, Financial Planning Association and Womenetics.com. Follow Jane on Twitter at: http://twitter.com/moneygal2020