|
Cash shy in golden years
|
 |
April 26, 2000: 12:52 p.m. ET
Study shows most Americans aren't saving enough for a retirement
|
NEW YORK (CNNfn) - Despite the booming U.S. economy, more than half of Americans aren't saving enough for retirement, a new study shows.
Fifty-six percent of American households are behind where they should be in saving for a comfortable retirement, according to a study by the nonprofit group Consumer Federation of America (CFA) and the online financial planning service DirectAdvice.com.
In addition, about 59 percent of Americans surveyed said they expect that their standard of living when they're older will be lower than it is now.
"People think they need stupendous amounts of money to save for retirement because they read in the paper about (Microsoft founder and billionaire) Bill Gates," said CFA Executive Director Stephen Brobeck. "But the good news is that most of the unprepared households could get ready by taking advantage of the magic of interest compounding."
To illustrate how a retirement nest egg can grow, Brobeck explains that saving even $25 a week for 40 years with a 5 percent return would grow to more than $165,000.
So while Americans reach for the calculator and start a long-term savings plan, experts say putting away money through an employer-sponsored plan, such as a 401(k), is the most important step you can take to build retirement savings.
About 55 percent of Americans who participate in their company's retirement plan would have adequate retirement savings, according to research by Catherine Montalto, an economist and professor at Ohio State University. Meanwhile, she also found that 24 percent of those not participating in such a plan would have adequate savings during their golden years.
To help Americans take control of their savings and create a retirement plan, the CFA and DirectAdvice.com have introduced an online retirement planner toolkit.
The calculators show you:
- How small savings on a regular basis can add up to big money over time.
- The power of compounding interest as a way to make money grow.
- The best asset allocation mixes when saving and investing.
- How to get the most out of your IRA.
- Why it makes sense to maximize an employer match in a company retirement plan.
The bottom line, financial experts emphasize, is to start saving early even if retirement is decades away.
"In real life, retirement savings has to be balanced and integrated with all the other financial goals in a person's life, such as home purchase, children's schooling, caring for an aging parent and so forth," said DirectAdvice.com President and Chief Executive Officer Brian Hollander. 
|
|
|
|
|
 |
|
