You’ve been startled by statistics like this before: Fifty-three percent of U.S. adults have not started making financial arrangements for retirement. A new Genworth study “Aging and Retirement: A Generational Perspective” also found that four out of 10 respondents admitted that not having saved enough for retirement is their biggest financial regret. And, in an example that illustrates the crisis ahead as longevity continues to increase, more than half of respondents gave themselves an F for their retirement planning efforts, while more than 60 percent said they enjoy good health.
Of course, the late start saving for a longer retirements is particularly problematic given the fact that the majority of workers do not have the traditional pensions afforded previous generations. What’s more, as longevity increases (the number of Americans over the age of 65 is projected to nearly double over the next 40 years, according to the U.S. Census Bureau), many Americans find themselves part of the “Sandwich Generation” — people struggling to save for their own financial futures while still providing financial support to their adult children and parents.
Interestingly, folks know what they need to do to achieve a secure retirement. This is evidenced by the fact that when asked “What financial advice would you give to younger generations?” a majority of respondents age 40 and older advised younger people to “save early and save often.”
As an industry, therefore, we must work to help channel that solid understanding into concrete and beneficial action. We need to light a fire under those planning for retirement who believe, to quote a song from Annie, “There’s always tomorrow for dreams to come true.” In fact, enjoying happier tomorrows, which in the case of retirement may be decades down the road, depends on doing something proactive today!
So how can we spark action? Given that the study found that 23% started saving for retirement to avoid becoming a burden on their children, we need to look at the spending and savings patterns of a family. That is, we often advise clients to spend less on a car that will be driven by their teenage son or daughter, to quit subsidizing their children’s lifestyles after college, to discuss the financial contribution they will make towards their children’s college education so the child understands the commitment that will be required from him or her if he or she goes to a private college versus a public college, etc. Many clients eventually agree that doing all they can for their children should, first and foremost, involve not becoming a burden to their children in their old age — at a time when their children may have other financial responsibilities with their own children.
In the end, to quote another song from Annie, your decision to save for retirement can prevent generations from enduring a “hard knock life.”