YOUR MONEY: Don't let bad news derail your planning
With many of us seeing the value of our retirement savings lower than a year ago, it has caused a panic about whether retirement is even an option anymore. Yes, lower savings does mean work may not end as soon as we are hoping, but it doesn't mea...
With many of us seeing the value of our retirement savings lower than a year ago, it has caused a panic about whether retirement is even an option anymore. Yes, lower savings does mean work may not end as soon as we are hoping, but it doesn't mean that it's now impossible to stay on our original track..
A record-low 13 percent of workers this year say they are confident about having enough savings to retire on comfortably, according to the 19th Annual Retirement Confidence Survey released earlier this month by the nonpartisan Employee Benefit Research Institute. It's not a big drop from the 18 percent who were confident last year, but it is at its lowest point since tracking began in 1993 and it is 50 percent lower since 2007, the institute reported.
Don't let lack of confidence derail your determination to succeed. It can easily cause you to throw your hands up and accept what life brings you, but the successful savers can throw their hands up and say "Stop! I can fix it!"
That's not easy. First, it requires you to make a commitment to cutting expenses, just like your savings or income has been cut. No matter what your expenses are, spendthrift or thrifty, there is room to cut. That accomplishment results in more money to invest.
In the report, only 25 percent of those surveyed said they are saving more money. In poor investment conditions, the majority of us should be saving more because it proves that we need to take more responsibility for building our nest egg. More of us should also be seeking professional help on how to recover. Only 25 percent in the report said they are seeking advice. If you have suffered greatly in your effort to build a nest egg, you are more likely to need advice on how to avoid further mistakes.
That advice would also help you focus more on how much to save for retirement to get back on track. The report found that only 44 percent of workers have taken the time to calculate how much they need in retirement.
Once you understand what's wrong with your nest egg and how much you need, then you can adjust your savings by increasing retirement plan contributions (using money from the expenses you cut). Amazingly, 72 percent of workers have not adjusted the percentage of their salary that goes into an employer plan, the survey found.
An adviser can also help evaluate an employer's plan and suggest whether it would be better to opt out and manage your own retirement plan. Employer plans can often be more expensive when it comes to fees, and more employers have or are considering cutting plans or reducing contributions.
While employer plans have given the most bang for the buck in the past, we are now seeing many becoming too expensive and too limited in investment choices in addition to possibly being at risk if the employer fails.