It’s no secret the savings rate in this country is abysmal. Last year saw the first recorded negative savings rate since the Great Depression in the 1930s. And retirement – the biggest reason to save – is lasting longer and longer, meaning fewer dollars saved are going to have to last longer.
Brown & Tedstrom, a Denver-based financial planning and investment advisory firm, conducted a survey that shed light on how people are preparing for retirement. The firm also offered tips for a successful retirement and retirement land mines to avoid.
The survey found that a majority of respondents can only live 10 years or less on their current savings, and that is despite the fact that running out of money is the No. 1 retirement concern for the majority – and 71 percent of non-retired workers age 45 and older said they are saving some percentage of their income for retirement. But most are not saving enough. Sixty-two percent of those 45 to 64 years old have not factored the cost of long term care into their retirement plan, even though the average annual cost of LTC is $70,000.
“A vast majority of Americans are not adequately planning for retirement, which could create a financial time bomb for their family that eventually places a significant financial burden on their children,” said Mark Brown, managing partner at Brown & Tedstrom. “One of the first steps in mapping out a plan is to develop a checklist to identify your strengths and address any gaps you might have to help ensure a successful retirement.”
Only 25 percent of respondents have created a retirement plan checklist. As a resource for the underinformed, Brown & Tedstrom created a list of the top five retirement landmines:
- Don’t place more than 10 percent of 401(k) investments in company stock.
- Diversify investments, making sure risk matches the retirement time horizon.
- Long term illness. Plan for the unexpected.
- Don’t fall for low-rate adjustable mortgages.
- Resist market timing and impulsive shortterm decisions.
Here are the company’s top five tips for a successful retirement:
- Create a retirement checklist.
- Develop a retirement shock absorber.
- Talk to the family.
- Plan for a long life.
- Don’t forget about long term care.
For more information, visit www.browntedstrom.com.