Many workers counting on pensions that aren't there - MarketWatch
This article from Market Watch shines a light on why we should all have a home based business. Face it, if you're in a lower income bracket, you aren't going to be able to save 25% of your income and even if you did, would that be enough to live the comfortable life you deserve after years of hard work? I don't think so.
The best way to put away some cash is to increase your income and barring getting a second or third job, working from home is the best way to increase your income.
Many workers counting on pensions that aren't there - MarketWatch
RETIREMENT LIVING
The land of pension fantasies
New survey finds 61% of workers expect a pension
By Andrea Coombes, MarketWatch
Last Update: 12:01 AM ET Apr 4, 2006
SAN FRANCISCO (MarketWatch) -- Corporate America has changed the retirement-plan landscape but a good portion of workers don't seem to realize that yet.
Sixty-one percent of workers say they expect to receive a traditional pension when they retire, despite the fact that just 40% of those surveyed say they or their spouses have such a plan, according to the 16th annual Retirement Confidence Survey, of 1,252 U.S. adults 25 and older.
The Employee Benefit Research Institute, a nonprofit research firm, produced the report with Mathew Greenwald & Associates, a survey-research firm.
Plus, there's plenty of evidence that many employers who still offer traditional pension plans are moving away from them, often freezing new employees out of such plans or, in the case of companies filing bankruptcy, turning them over to the federal government's Pension Benefit Guaranty Corp.
"I'm sure anyone who's read the paper lately would know that the likelihood [of receiving a traditional pension] is going down very rapidly," said Jack VanDerhei, an EBRI fellow and co-author of the report. Read the full report.
If workers think "that's going to be a major component of their retirement income, I think they're likely to be sadly mistaken."
Confident to a fault?
Overall, workers continue to demonstrate a confidence about retirement that seems to ignore financial facts.
About 65% of current workers say they and their spouse have less than $50,000 in retirement savings (not including their primary residence or the value of a traditional pension plan).
Yet 68% of people are somewhat or very confident that they'll have enough money to live on in retirement.
In fact, of the 24% of workers who are very confident about doing just fine in retirement, 22% are not saving for retirement now, 39% have less than $50,000 saved, and 37% have not yet calculated how much they'll need in retirement.
Still, older workers are likelier than younger ones to have a heftier amount saved up: 26% of workers 55 and older have saved $250,000 or more (not including primary residence or defined-benefit plan) compared with 5% of workers 25 to 34 who have saved that much.
Nine percent of those 35 to 44 have saved $250,000 or more, as have 16% of those 45 to 54.
Seventy-three percent of workers 25 to 34 have saved less than $25,000. The same goes for 49% of those 35 to 44, 43% of those 45 to 54 and 43% of those 55 and older.
Set my plan on autopilot
A majority of those surveyed are eager for their employers to take back some of the responsibility and choices that have been shifted to workers' shoulders in recent years, as companies have moved from traditional pension plans, also called defined-benefit plans, to defined-contribution plans such as 401(k)s.
Sixty-nine percent of the workers surveyed would like employers to automatically enroll employees in retirement-savings plans, 65% think firms should automatically increase workers' contributions when workers get a pay hike and 59% would like to see companies automatically investing workers' contributions.
"The trend from defined-benefit to defined-contribution plans has not come because employees have wanted to take on that risk. It's because employers have wanted to get rid of that risk," VanDerhei said.
Rate of change is glacier-like
In many ways, this year's findings are similar to previous year's findings. About the same portion of respondents -- 70% this year, 69% last year, 67% in 2002 -- said they or their spouse has saved at all for retirement.
Still, that portion has risen over the past decade: In 1996, just 60% said they had saved for retirement. (That number was 74% in 2000, before the bursting of the Internet bubble.)
"It's kind of like watching a glacier move," VanDerhei said.
VanDerhei says the retirement situation is dire for many Americans, particularly those in the lowest income brackets.
"There's absolutely no chance for a sizable portion of future retirees to have sufficient retirement income unless they start saving at least 25% of their compensation a year," he said, citing this survey and other EBRI research.
"As we know, there's no chance, especially for people in the lower-income quartiles to do that." End of Story
The best way to put away some cash is to increase your income and barring getting a second or third job, working from home is the best way to increase your income.
Many workers counting on pensions that aren't there - MarketWatch
RETIREMENT LIVING
The land of pension fantasies
New survey finds 61% of workers expect a pension
By Andrea Coombes, MarketWatch
Last Update: 12:01 AM ET Apr 4, 2006
SAN FRANCISCO (MarketWatch) -- Corporate America has changed the retirement-plan landscape but a good portion of workers don't seem to realize that yet.
Sixty-one percent of workers say they expect to receive a traditional pension when they retire, despite the fact that just 40% of those surveyed say they or their spouses have such a plan, according to the 16th annual Retirement Confidence Survey, of 1,252 U.S. adults 25 and older.
The Employee Benefit Research Institute, a nonprofit research firm, produced the report with Mathew Greenwald & Associates, a survey-research firm.
Plus, there's plenty of evidence that many employers who still offer traditional pension plans are moving away from them, often freezing new employees out of such plans or, in the case of companies filing bankruptcy, turning them over to the federal government's Pension Benefit Guaranty Corp.
"I'm sure anyone who's read the paper lately would know that the likelihood [of receiving a traditional pension] is going down very rapidly," said Jack VanDerhei, an EBRI fellow and co-author of the report. Read the full report.
If workers think "that's going to be a major component of their retirement income, I think they're likely to be sadly mistaken."
Confident to a fault?
Overall, workers continue to demonstrate a confidence about retirement that seems to ignore financial facts.
About 65% of current workers say they and their spouse have less than $50,000 in retirement savings (not including their primary residence or the value of a traditional pension plan).
Yet 68% of people are somewhat or very confident that they'll have enough money to live on in retirement.
In fact, of the 24% of workers who are very confident about doing just fine in retirement, 22% are not saving for retirement now, 39% have less than $50,000 saved, and 37% have not yet calculated how much they'll need in retirement.
Still, older workers are likelier than younger ones to have a heftier amount saved up: 26% of workers 55 and older have saved $250,000 or more (not including primary residence or defined-benefit plan) compared with 5% of workers 25 to 34 who have saved that much.
Nine percent of those 35 to 44 have saved $250,000 or more, as have 16% of those 45 to 54.
Seventy-three percent of workers 25 to 34 have saved less than $25,000. The same goes for 49% of those 35 to 44, 43% of those 45 to 54 and 43% of those 55 and older.
Set my plan on autopilot
A majority of those surveyed are eager for their employers to take back some of the responsibility and choices that have been shifted to workers' shoulders in recent years, as companies have moved from traditional pension plans, also called defined-benefit plans, to defined-contribution plans such as 401(k)s.
Sixty-nine percent of the workers surveyed would like employers to automatically enroll employees in retirement-savings plans, 65% think firms should automatically increase workers' contributions when workers get a pay hike and 59% would like to see companies automatically investing workers' contributions.
"The trend from defined-benefit to defined-contribution plans has not come because employees have wanted to take on that risk. It's because employers have wanted to get rid of that risk," VanDerhei said.
Rate of change is glacier-like
In many ways, this year's findings are similar to previous year's findings. About the same portion of respondents -- 70% this year, 69% last year, 67% in 2002 -- said they or their spouse has saved at all for retirement.
Still, that portion has risen over the past decade: In 1996, just 60% said they had saved for retirement. (That number was 74% in 2000, before the bursting of the Internet bubble.)
"It's kind of like watching a glacier move," VanDerhei said.
VanDerhei says the retirement situation is dire for many Americans, particularly those in the lowest income brackets.
"There's absolutely no chance for a sizable portion of future retirees to have sufficient retirement income unless they start saving at least 25% of their compensation a year," he said, citing this survey and other EBRI research.
"As we know, there's no chance, especially for people in the lower-income quartiles to do that." End of Story
posted by Brian | 1:46 PM
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