A study of 10,000
Nyhart, an employee benefits handler and consultant, found workers fell behind during the downturn because they withdrew money or lowered the percentage of their salary they contributed.
Frozen and terminated pensions and a bleak outlook for Social Security mean nothing fills the gap, said Nyhart chief executive Tom Totten.
“It’s a scary proposition,” he said.
Nyhart’s study included data from employees with 110 companies who potentially could work at least 30 years, and their projected future employer and employee contributions. It suggests:
*** Four-fifths could not afford to retire by the age of 65.
**8 Employees who contribute to their 401(k)s and earn $60,000 to $70,000 a year recorded the lowest projected retirement age, 69.9 years.
*** Those who earn less than $25,000 a year have the highest projected retirement age, 77.9 years.
Nyhart’s study is just one snapshot, though. Some workers moved their 401(k) contributions to Treasuries or other investments viewed as better options, but “clearly there has been less saving,” said Srinivasan Sundaram, a Ball State University finance professor. “In general, people were just scared the skies were going to fall on their head.”
With the recovery under way, workers with 401(k)s need to invest at least 3% of their income and get the company match if possible, said executive Beth McHugh of Fidelity Investments in Covington, Kentucky.
Saving longer to take it easy later may seem more daunting now, but more than the age of retirement is changing: We’re living longer, too.
Brian Graff, CEO of the Virginia-based American Society of Pension Professionals & Actuaries, said that if more Americans live closer to 100, “should they be spending one-third of their life in retirement? Does that make sense? This is part of the debate”. — USA Today/MCT