When You Hear Retirement, Do You Think About Yours?

At Financial Engines, we talk about retirement all the time. It’s easy. We are here to help our clients think about their future and plan accordingly. But don’t be fooled; when folks first start working with us – if they haven’t focused on retirement before – they often experience a range of emotions.

“Retirement is for someone else, it’s not about me.”

That’s often the most common reaction. And our new clients are not alone. Depending on how old you are, the idea of retirement may be the last thing on your mind. Early in your career, you may still be thinking about repaying school loans, getting married or buying a house. Mid-career you have to balance your future against saving for college, kid-driven expenses and possibly helping your aging parents. A recent EBRI study reveals some of the reasons retirement savings can get off track.

Time slips away while we’re living life and it’s hard to imagine a time when you might not be earning a living.

Suddenly you look up and realize you actually do have to think about your own retirement, or at least your golden years, however you plan to live them – working or not. So it makes sense to start planning as soon as you can. I like to think of it as my ultimate margarita fund. Of course, to sip those eventual margaritas, I’ll need to make sure I have housing lined up, my medical care planned and a savings account so I can pay my monthly bills.

Give your goal a name that works for you if “retirement” doesn’t fit the bill, then start saving.

If you are just starting out, it’s easy. 

Automatically check that 401(k) option when it’s offered by your employer. Commit to investing whatever it takes to reach the company “match“. Then make that a habit for the rest of your career. Studies show that if you never see it, you don’t miss it. This is the easiest decision to make early on and you will thank yourself for it years down the road.

If you’re mid-career, time it with your next pay increase or job change.

You are less likely to notice the initial “pinch” if you time joining your company’s 401(k) plan with a pay increase or job change. But you don’t have to wait for a special event! If you are ready to start saving, talk to your benefits administrator today and get going. Learn about the company match so you can make the most of your savings.

If you are getting closer to retirement, you need to get cracking.

Hopefully you’ve been saving during your career, but if you haven’t there’s still time. Your benefits administrator can help you get started. You may also consider working longer so you can put aside even more.  You are not alone….many boomers are realizing they may need to work a bit longer so they can save more. And remember, if you are 50 or over, you can increase your savings amount or make a catch up contribution to help make up for lost time.

Whatever your age, be sure to check on your savings regularly and make sure your investments are matched to your personal goals. Financial Engines offers investment advice to 401(k) plan participants; services are available only through employers. To see if you are eligible for our services, check here to see a partial list of employer clients or you can simply contact us to find out more.

EBRI Survey Captures Worker Pessimism about Having Enough Savings to Retire

Even with the stock markets at historic highs and the national economy sputtering back to life, more workers than ever lack the confidence they will have enough money to retire comfortably, according to the latest Retirement Confidence Survey released last week by the Employment Benefit Research Institute (EBRI). Twenty-eight percent of workers (up from 23 percent a year ago) share this dim view of their retirement future – the highest percentage tallied in an EBRI survey since 2011.

According to the survey, there are a lot of factors conspiring against us:  We’re living longer and saving less in the face of pressing financial obligations and debt. Low interest rates make it harder to catch up. Companies are downsizing, requiring us to leave the full-time work force earlier than we plan.  We have increased health spending. Pensions aren’t what they used to be (and there are fewer of them available) or we haven’t been contributing to our 401(k) or other retirement accounts, like IRAs.

It’s no wonder that workers are so pessimistic about the future.

Estimating how much income you will need in retirement in complex and can be challenging. While many workers and retirees are nervous about the future, as EBRI’s data suggests, most continue to go it alone.  Just 23 percent of workers (and 28 percent of retirees) report they have obtained investment advice from a professional financial advisor who was paid through fees or commissions.  Of these workers, 27 percent followed all of the advice, but more disregarded some of it and followed most (41 percent) or some (27 percent), according to EBRI.

The truth is, most people may not be equipped to manage today’s financial complexities – let alone tomorrows’ uncertainties. There’s market risk, longevity risk and health risks.  And people have more financial pieces in more places than ever – 401(k)s, IRA, Roth, ETFs, HSAs, personal savings and more.

EBRI’s survey results reinforce the magnitude of the national retirement crisis. But individuals do have the power to change their outcomes for this new retirement.  Taking action is the first step.

People interested in the latest news and offerings from Financial Engines can follow us on Twitter at @retirewell, on YouTube and via LinkedIn.