Hurt by the downturn and worried that they have saved too little for retirement, many Baby Boomers are working longer — 18 percent of Americans 65 and over are in the labor force, up from 13 percent a decade ago, translating into an increase of three million workers in that age group.
As for saving money, if someone begins saving $10,000 a year for retirement at age 35, that can easily turn into an impressive nest egg of more than $500,000 by age 65, thanks to compounded investment returns. But if one does not begin saving until age 50 and then sets aside $5,000 a year, that could mean a nest egg of less than $100,000, far less than many experts say is needed. According to the Federal Reserve’s most recent figures, the median family 55 to 64 had $98,000 in retirement accounts.
Worried about all the inadequate savings, George Papadopoulos, a financial planner in Novi, Mich., has a maxim. “I tell everybody I talk to — the earlier, the more, the better,” he said. “The earlier you can save and the more you can save and invest, the better the options you will have in life and in retirement.”
A decade ago, Jonnie Worth had her eyes on retiring at age 62. Year after year, she funneled money into her 401(k), first when she worked as an event planner and later when she worked in the private banking department at JPMorgan Chase. But the financial crisis of 2008 swamped Ms. Worth. “Like everyone else, I watched my retirement savings plummet,” she said. “I lost a big percentage of my investments.” Now 65, Ms. Worth is still working full time; her hopes of retiring at 62 sank along with the 2008 stock market.
There is plenty of reason for all the retirement anxiety. Like Jonnie Worth, many Americans lost tens of thousands, even hundreds of thousands of dollars, when the markets and their 401(k)’s swooned in 2008 — all told, 401(k) plans lost $2.8 trillion in value. Thirty-six percent of American workers age 55 to 64 say they have less than $25,000 in retirement savings, according to a survey by the Employee Benefit Research Institute. (The number is 52 percent for workers age 45 to 54.)
Source: The New York Times, March 8, 2012
Boomer Retirement Life Tips explores their personal strategy and saving for retirement to where they will retire, how to handle aging parents and adult children, to health and wellness tips for aging like fine wine and deciding on a phased retirement or encore career.