‘Retirementology’ book review: Why Americans fail at saving – USATODAY.com

‘Retirementology’ book review: Why Americans fail at saving – USATODAY.com

via ‘Retirementology’ book review: Why Americans fail at saving – USATODAY.com.

Excerpt from the article:

Many of us are making classic mistakes in the way we invest, spend, save, borrow and earn money.

Five of the greatest gaffes:

•We buy into the “red zone” hype. Salsbury dings the financial-services business for pushing the “retirement red zone” concept — a period starting just five years before retirement and ending five years into retirement.

“Millions of Boomers may be seeing red, but there is no zone in sight,” Salsbury says.

•We fall numb by “the number.” Another financial-services bogeyman is “the number” — the amount you supposedly need to comfortably retire. Salsbury maintains that nobody really knows what that number is.

•We’re not logical when it comes to saving for retirement. Americans worry about not having enough money to retire, yet fail to take advantage of savings programs available to them, Salsbury says.

A striking 70% of Gen Y workers don’t participate in employer-sponsored accounts, and more than 20% of workers 45 and older have stopped contributing to their 401(k)s.

•We’re nearsighted about investing. Behavioral economists call this “the recency effect.” You notice your mutual fund has soared in value over the past quarter or two, so you overload your portfolio with stocks. Or, after watching your stock holdings plummet, as in 2008, you go ultra-conservative and bulk up on money-market accounts.

•We pull money out of retirement savings before retiring. Salsbury says 46% of people cash out of their 401(k)s when changing jobs, rather than rolling the money over into another tax-deferred retirement plan.

‘Planning for retirement is more like a 50-year project than a 10-year project’

Shared by: 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

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