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Last Sunday’s edition of the Chicago Tribune had an interesting article called The Time To Save is Now by Janet Kidd Stewart. It gave an overview of the lack of savings that many soon-to-be retirees currently have. Some of the worrisome points she makes:

• More than a third of people over 55 aren’t saving for retirement
• Fewer than half have tried to calculate how much they’ll need in retirement
• Just over half have saved less than $100,000 excluding home equity and defined-benefit pensions

It’s unclear whether those not saving for retirement are depending mostly on defined-benefit pensions, social security, downsizing their home to turn their equity to cash, or some combination of these.

In any case, the most disturbing point to me was that fewer than half have actually tried to sit down and figure out how much money they will need. Despite the multitude of retirement planning tools and calculators on the Internet (which, to be fair, a lot of the older generations may not be familiar with), they are deciding to shoot from the hip and hope they hit the target. This is very dangerous if for no other reason than the rising cost of health care for retirees.

To see where you stand in relation to your peers in terms of funds for retirement, see the table below from EBRI 2007 Retirement Confidence Survey:

The moral of the story: start saving today. If you are nearing retirement, take advantage of 401(k) catch up contributions if possible. If you are young, contribute early, contribute often, and continually monitor your portfolio.

To learn how to maximize your retirement savings, check out this article at Free Money Finance.

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