Across My Desk: Retirement

Retirement has its costs and according to a recent study, one-third of Americans will be poverty stricken during their golden years.

On June 9, 2006, notes from a study from the Center of Retirement Research were published in Money Management Executive. Here's how that story by Lee Barney read:

"Forty-three percent of Americans are likely to struggle in retirement and fully a third could fall into poverty, according to a report from the Center for Retirement Research.

The center based its assessment on households replacing 73% of their preretirement income through Social Security benefits as well as pensions and 401(k)s and ruled a household as "at risk" if it could not come within 10% of those levels.

"For the bottom third of the income scale," said Alicia H. Munnell , director of the center, "that means falling into poverty and not being able to meet basic needs." Even for the middle and upper thirds of the income scale, Munnell continued, they are likely to have to scrimp to get by.

People born between 1965 and 1972, or Generation X, fare the worst, with 49% of these folks at risk, due to the majority not having pensions and possibly seeing Social Security benefits decline in their lifetimes. Baby Boomers, or those born between 1946 and 1964, do slightly better, with 33% of those born before 1955 at risk, and 44% of those born after that time at risk.

"People have to support themselves for longer at a time when resources are decreasing," Munnell said. "In theory, 401(k) plans work, but in fact, they don't The average balance at retirement is only $60,000, and individuals don't save outside of that."

My advice: From this day forward, say "No" to spending and "Yes" to saving.