The Worry that Never Retires

Being able to retire in comfort, at a relatively young age, became an essential part of the American Dream in the past century. Now, this part of the dream is under threat, and many Americans are worried.
According to polling firm Harris, a whopping 74% of American adults who are not yet retired say they worry about having enough money to retire. Nearly 70% of these worried folk say that planning for retirement is a big concern of theirs.
Worries about retirement span the generations, but young people are particularly concerned about whether Social Security will be there for them when they wish to retire. Harris said that, overall, 35% of its poll respondents say they have faith in social security being there when they retire. However, just 30% of Gen Xers say they do.
Among Millennials polled, only 27% said they had faith that Social Security would be around for them when they were ready to retire.
Seventy percent of Harris’ respondents worried about being able to pay for their health care in retirement.
Things are not likely to get much better for these Americans, since 69% of them worry they are not saving enough toward retirement. It’s not surprising, with nearly half saying they live paycheck to paycheck, and simply cannot afford to save for retirement.
The findings of this poll track with so much of the personal finance data we’ve seen in recent years: wages have not risen for most middle-class Americans, while expenses have. College expenses (and debt), are of particular concern for younger Americans, while health care, education and elder care expenses have all added up for today’s middle aged and older American workers.
While last month’s jobs report was encouraging, a deep look at the data reveals that job growth is highest in jobs at the lower end of the pay scale. If these conditions persist, this will not be the last poll that shows Americans fearing that they might never be able to afford a comfortable retirement.

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Early Retirement is a Fading Dream

Americans are getting downright pessimistic about their chances of retiring at age 65. A new comparison of current and future retirees exposes some big differences in expectations between the two groups.

According to a new study from Northwestern Mutual, the average age at which current workers surveyed expect to retire is 68. Among current retirees polled, the average age they retired was just 59.

Northwestern Mutual found that, while many current workers plan to put off retirement by choice, an alarming number of them simply don’t feel they will have the finances to retire at a “traditional” retirement age.

In the survey, 45% of current workers said they planned to continue to work in retirement — not because they have to but because they want to. However, 13% said they don’t think they’ll never be able to retire.

Of those workers polled who were aged 60 or more, 38% said they would have to work until age 75 or older before they could retire.

Among those already retired, 72% say they are completely retired from working.

These findings underscore the generational shift that is taking place in retirement preparedness. Those who are nearing traditional retirement age today are simply not as well prepared financially as those who came before them.  

Whether this is due to changes in retirement savings options (pensions to 401(k)), economic changes and a declining savings rate is debatable. What is clear is that many in this country will face some tough choices as they age.


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Are Corporate Pensions Underfunded?

The funding level of U.S. corporate pensions has dropped a bit, but it’s still it over 90%, according to investment manager BNY Mellon.

Overall, BNY Mellon Institutional Scorecard revealed that the funding status of corporate pensions fell 0.4 percentage points in May 2014 to 90.6%. While it’s still pretty decent, this number represents a new low for 2014, the firm said.

BNY Mellon said that its Scorecard also showed that liabilities in corporate pension portfolios increased 2.3% during May, outpacing a 1.9% increase in assets.

While the funded status of corporate plans is down 4.6 percentage points on the year, things are looking a lot brighter for public defined benefit plans, endowments and foundations. These plans exceeded their targets for the month, BNY Mellon said.

Pension plans are just one piece of America’s retirement dilemma, as millions of Baby Boomers reach retirement age. A host of data points show that the Boomer generation is in relatively poor shape for retirement, and that Gen X is doing even worse.

Americans clearly need to save more, but this will only happen if the economy can improve to a level that supports greater labor participation and higher wages. Far too many Americans are living month-to-month these days, and saving very little for the future.

However, for those who are fortunate enough to even have a corporate pension plan, it is relatively good news that funding is still above 90%. 


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The Best Place to Retire Is…South Dakota?

While it may lack the year-round warmth of Florida or Arizona, the beautiful state of South Dakota has nonetheless been ranked as the best place to retire in the whole United States.

New research from shows that some popular retirement spots have been surpassed in terms of cost of living, crime rate, health care quality, tax burden and “well-being” by seemingly unlikely ones – with South Dakota coming in at #1.

South Dakota benefits from a low tax burden, a low crime rate and a high wellness score, Bankrate said. (“Wellness” comes from the Gallup-Healthways Well-Being Index, which quantifies how satisfied residents are with their surroundings.)

Coming in right behind South Dakota were Colorado, Utah, North Dakota and Wyoming. All of these states boast high scores in areas deemed important for a healthy and stress-free retirement.

However, we can’t help but notice that all of these places –while awesomely beautiful — are quite “wintery” for much of the year. Don’t retirees crave the endless sunshine on offer in traditional retirement spots like Florida and Arizona? Yes, they do – and Bankrate’s study does indeed factor in weather as a contributing factor to retiree bliss.

However, for many of today’s retirees, having reduced crime and lower taxes actually come out ahead of having permanent summer weather as ingredients for a great quality of life.

Access to high quality health care has always been a prime consideration in where to retire – and these “cold” states just happen to be doing a better job of delivering it these days.

So, if you are getting to a stage in life where retirement decisions loom near, perhaps you should look into beautiful, scenic (and prosperous) South Dakota as an option.


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