Entrust New Direction Blog

Recent surveys from Wells Fargo/Wachovia and The Center For Retirement Research indicate that Americans, including people who should be pretty close to retiring (ages 50-59), are nowhere near ready to retire.

Of course, it's in Wells Fargo/Wachovia's best interest to scare people into using their retirement vehicles, but the numbers of many surveys are similar.  

The Wells Fargo report indicates that pre-retirees (ages 50-59) estimate that they'll require $800,000, but they've only saved $300,000 (median).  They plan on spending 10% of their retirement total each year, which is over double what most advisors recommend.  So not only will this group have not enough money upon starting retirement, they'll also spend it quicker than most experts say they should.

With an organization like the Center for Retirement Research of Boston College, which has no obvious benefit from indicating a dark and stormy retirement outlook, I'm more likely to pay attention. 

Their "National Retirement Risk Index: After The Crash" reports that 51% of households are now at risk of not retiring with a reasonable amount of retirement income.  This is pretty scary, especially considering the many estimates that indicate social security's limited life span and the dearth of real pension plans.

To me, this is motivation to ensure my and my family's retirement comfort, because it tells me that the government will be no help.  Even if the government wanted to help, they'll likely be helping the folks who starting planning for retirement too late, if at all.  

Now my wife has been working on my inherent cynicism, which I consider, of course, realism.  So I'll try to reframe this in a positive light.  Hmmm.  Hardly anyone has enough money saved for retirement.  Many less companies are matching retirement funds.  The folks in 401(k)s who had saved for retirement lost huge amounts in the stock market crash.  Let's see... I got it!  The beach will be empty because everyone but us will still be working!

Photo courtesy of jmenard48.

Employer healthcare costs are projected to jump 9% in 2010, and employees' costs will likely grow to double digits, according to a report from consulting company PricewaterhouseCoopers.

42% of the 500 employers surveyed reported that they would increase their employees' part of the cost burden.  41% indicated they would increase the cost share through plan re-design.

20% of employers expect to add a high-deductible health care plan as an option in the next two years.  PricewaterhouseCoopers reports that HDHPs are expected to lower health care utilization.   HDHPs also have the added benefit, when combined with a self-directed Health Savings Account, of becoming an investment vehicle.

Those employees who don't have an HDHP are expected to increase their usage of the health care plan, PricewaterhouseCoopers speculates, because many are worried about a potential layoff and want to utilize their health care before that may happen.  Unemployment is adding to the higher cost, as less people are members of commercial health care plans.

Wondering about your options as an employer?  Learn more about Health Savings accounts from the employer's perspective.

Not sure if an HSA is a good idea for you or your family?  Read one person's perspective on HSAs from the employee point of view.

A small study was released last week detailing how well (or badly) couples talk to each other about money, investments, budgeting, retirement. The results from the 500 couple study (by Fidelity) indicate what we probably already know - couples don't necessarily agree, and don't necessarily communicate about their retirement future or other financial topics.

* only 38% decide on retirement investments together

* 60% disagree on what age they will retire

* 42% differ on planned retirement lifestyle (how much they'll spend on what)

Perhaps none of these results are surprising, but one stat that I found very surprising:

* 85% of couples don't feel confident that either one could assume responsibility of the finances.

This indicates:

1) only 15% of couples share the financial load (or agree on their capability to share the load)

or

2) more than 15% share the financial work, but each person secretly thinks the other is a financial ignoramus

Maybe number 2 is correct, since:

39% don't agree on whether they own an annuity

While the study purports to be a cross-section of society, it's not as if the respondents had no requirements. The couples had to be married, 45-72 years old, with at least $75k income and at least $100k investable assets.

The study doesn't indicate gender, but I'd be interested to know which gender (in heterosexual couples) does more money-work. I'd also like to see if the person who makes more money takes more money responsibility, or if the person who works more hours takes more or less money responsibility.

Perhaps I should solicit a study....

Gallup released survey results today which may be obvious, if not a little frightening. Only 41% of Americans believe they will be able to retire "comfortably". Just five years ago, that number was 59%. This is not a survey taken in a retirement home, but among people who, in some cases, have almost fifty years to save and invest.

This speaks to the obvious. Most people's retirement money is tied up in stocks. The stock market has been wildly erratic, to be kind. What is not so obvious can be gleaned from the numbers - most Americans don't have confidence that the stocks will return, or at least will not return in time. But most Americans don't know that they have an option. Unfortunately, self-directed retirement plans are like an amazingly talented underground band that nobody knows. I believe, and maybe you would agree, that most Americans would choose to invest in what they know, not what some stock broker recommends.

The Gallup poll also reports that 52% of Americans don't think they will be able to retire comfortably. Over half. What are they doing about it? Panicking? Escaping from the unpleasant thoughts? Possibly they're hoping that the government will provide. If you know anyone in this predicament, please tell them that they have options. Retirement funds are not stocks or nothing anymore. They do have a choice.

Hopefully, you have a self-directed retirement account and can invest as you see fit. If not, fill out an application and free your retirement funds.