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Ensuring that you can retire

Posted: October 27, 2008 3:05 p.m.
Updated: December 29, 2008 5:00 a.m.
An increasing number of Americans believe that a comfortable retirement may be beyond their reach.

Why? What can you do about it?

According to the Employee Benefit Research Institute's Survey, the percentage of workers who believe they will have a comfortable retirement has dropped from 27 percent in 2007 to 18 percent in 2008, the largest decline in the survey's 18-year history. Of current retirees, just 29 percent said they were optimistic that they had enough money for retirement, down from 41 percent last year.

The survey also noted that part of the confidence decline can be attributed to issues brought out by public discussion during the presidential debates.

The future of Medicare and Social Security were stressed in such a fashion that individuals began to realize they will have to accumulate sizable savings on their own just to accommodate health care costs and other basic expenses.

In fact, the survey found that workers and retirees are less likely than in 2007 to express confidence that the Social Security system will continue to provide benefits of at least equal value to those received by retirees today. While worker confidence about the future of Medicare benefits remained fairly stable, retiree confidence about Medicare benefits dropped by nearly half (from 15 percent in 2007 to 8 percent in 2008).

Many other statistics are noted in the institute's survey, such as reduction of pensions in the last 30 years, and lack of participation in self directed 401(k) plans. In 1979, 62 percent of workers participated in an employer-sponsored retirement plan; 16 percent participated in a defined contribution plan such as a 401(k), according to the institute.

By 2005, those numbers had reversed, with 63 percent of workers reporting they participated only in a 401k plan and only 10 percent in a traditional pension. As a result, most workers today are responsible for contributing to and managing their own retirement nest eggs.

Adding to the worry of having enough to retire is the increasing expense of health care, and not saving enough, which most often can be attributed to a lack of planning.

Many people have no idea how much they need to save for retirement. As a result, many underestimate their expenses in retirement. So, how do you take control of your own situation?

The first step is to consult with a financial adviser who can help you calculate your retirement needs, an appropriate asset mix of your investments, and if you are at or near retirement, a withdrawal rate that will last a lifetime. As reported in the survey, only 19 percent of respondents had consulted with an advisor.

Will you be able to retire? Consult with your financial advisor and make a plan that fits your goals and give you peace of mind. Take the steps necessary to plan, work the plan, and enjoy the fruits of your labors.

You deserve it.

Jim Letini, CLU, ChFC, IAR is president of Lentini Insurance & Investment, Inc., located in Santa Clarita. His column represents his own views and not necessarily those of The Signal.


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