Monday, April 02, 2007

Ready for a retirement surprise?

A Bloomberg.com article by Kevin Haas asks the question, "are you saving enough"?

In, "Ready for a Big Retirement Surprise? Save Now", Haas lays out the case for examining retirement needs more closely and working towards saving the appropriate amounts.

This is a familiar refrain, but what's helpful about Haas' article is that its advice is based on two underlying, and important, real-world trends.

Put simply, many Americans underestimate the amounts they'll need for retirement. Add to this the knowledge that a large percentage of retirees wish they had saved more, and you will see that Americans are not saving enough.

An excerpt from "Retirement Surprise?":

The evidence suggests that many people aren't saving nearly that much. One study cited by Skinner found that fully a third of Americans see a drop in their consumption of at least 33 percent when they retire. Some 73 percent of retirees report that they wish they had saved more as they planned for retirement.

What's especially useful about this article, is that it points to the reality of ever increasing costs for services in areas (such as health care) where government regulation and intervention are high. This at least hints at the rising costs of living that have been papered over in the official government statistics on inflation.

And as we've seen from our recent post on inflation, this ongoing phenomenon distorts economic decision-making and leaves pensioners and retirees with an unknown variable in their retirement planning: the rate at which their money and savings are declining in value.

When more retirement planning articles make a point of addressing this issue, retirees (and other perceptive observers) will be better informed and better served. In the meantime, see Haas' article for ideas on how you can better plan your saving needs.