|Less people have retirement plans|
|Wednesday, 20 October 2010 14:28|
Another casualty of the challenging economy affecting Americans for the past three year is that less people are saving or investing for their retirement. In March a CNN Money report indicated that approximately 43 percent of Americans had any credible retirement savings. Such savings is interpreted as 1.5 times annual income for people between 35 years and 45 years, 3 times annual salary for people between 45 and 55 and six times annual salary for those over 55.
However according to a National Weekly study among Caribbean and African -American residents age 30 to 67 in South Florida only 27 percent have funds set aside for retirement, and the remainder have little plans for retirement other than the anticipation of federal government Social Security benefits, which a recent international report indicated averaged just 60 percent of one’s annual income at retirement.
The study showed that in the age group 30-44, 36 percent had a retirement account like an employment related 401(k) plan, to which they co-contribute with their employers. For the age group 45 -55, 33 percent had any form of retirement savings; in the 56 to 65 age group - 21 percent and those over 65 years only 11 percent. The older the respondents the less retirement savings there was.
The study indicated that over the past three years as the economy worsened several people over 40 began to draw cash from their 401(k) or retirement saving accounts to help with expenses as their incomes stagnated or dwindled. Instead of saving more as retirement approached older people found it harder to maintain retirement saving accounts. The existing accounts averaged just over $4,500 each..
Of those between ages 55 and 65, only 31 percent said they would be eligible for a pension, and the majority, over 80 percent, said the main source of income they anticipated was Social Security benefits, and 30 percent said they plan on requesting early SS payments at age 62, which means the monthly benefits could be lower than on reaching the official retirement age of 66.
Sixty-three percent said they planned having some form of employment (full or part-time) well after reaching the official retirement age of 66.
Seventy three percent admitted to being “extremely worried” about not having sufficient income to have a “decent live” in their senior years. The number one concern among people over 55 is the ability to pay their mortgages after retirement. Of those surveyed 38 percent over 55 years owned homes with mortgages averaging $1445 monthly with an average of 18 years remaining on these loans. A 62-year old Margate woman, said, “I will have to keep on working way past 70 to be able to continue paying my $1580 per month mortgage.” Other seniors said they considered taking out ‘reverse mortgages to enable them to benefit from the equity in their homes, and receive a moratorium on the principal payments, but as their home’s equity declined as property values also declined, that option also diminished.
While the plight of seniors appears very serious as they approach or enter their retirement years, younger people are taking a more serious approach in ensuring they build retirement accounts. Over 50 percent between 30 and 45 years are seeking jobs that carry retirement benefits, and most said they are weary of taking money from these retirement accounts. Those with jobs that do not offer a retirement plan are seeking to purchase Investment Retirement Accounts (IRAs) and or Annuities, or investing in long term certificate of deposits (CDs).
Overall more women 56 percent were taking steps to prepare for their retirement with some sort of savings or investment account compared to only 32 percent of men.
Over 80 percent said they were willing to establish a retirement account “if they could” but the uncertainty of the economy in recent years did not make it possible. It’s not that people in the community are not cognizant of the importance of establishing sound retirement savings plan. The problem is that the majority do not have the required disposable income to invest in a retirement account. Several people have sought financial advice re retirement but are not able to heed this advice. If this situation continues not only in the Caribbean-and African American communities, but across the country, a serious crisis is brewing regarding the standard of living for retirees/senior citizens.
Adding to the retirement woes is that the economy is making some people retirees way before age 66, as many companies opt to retire employees early as a cost saving measure. In addition, health problems also place some people in retirement prematurely. It’s therefore important that people begin seriously looking into some form of retirement saving plan well before age 50.
|Last Updated on Wednesday, 15 June 2011 11:52|