By John Packard

I’ll admidt. I am rather a bear these days. I cannot say that I have not been accused fo being a doom and gloomer by my peers. Things are happening right now that are unprecedented in our country’s history.

The good thing is that American’s are perennially optimistic. This has gotten us through tough times in the past, and hopefully in the future.

There are some interesting statistics which have come out which should be the sound of alarm bells:

On Wednesday, an annual survey of Americans recorded the largest-ever plunge in retirement confidence in 18 years of polling.

It’s not uncommon for long-term confidence to ebb and flow with changes in the economy, but the sharp drop reflects larger factors led by rising medical costs and an unusual plunge in home values.

That doesn’t mean the outlook for retirement is completely bleak. But the sobering trends have several implications, analysts say:

• Americans will need to start saving more, and many current retirees may need to cut back on spending.

• Pressure may build for politicians to revamp policies, ranging from incentives for saving to big programs like Social Security, that affect retirement incomes.

• So-called “human capital,” people’s skills and ability to work, is suddenly even more important to long-term wealth. That, not houses, appears to be the reserve that many Americans will tap, as retirement becomes a blend of work and leisure.

Americans having to work longer? Well yes. It seems that this is the natural progression of things. This will be due not only for the financial necessity but also because people are living longer. You can only golf so much before you burn out. Being active and adding to the economy is a good thing.

Still, the current financial landscape is daunting.

Americans are getting a financial wake-up call on several fronts. In the newly released survey, the percentage of workers very confident about having enough money for a comfortable retirement posted its sharpest ever fall, dropping from 27 percent in 2007 to 18 percent in 2008. The poll, involving 20-minute interviews with more than 1,000 Americans in January, found healthcare to be an overriding concern affecting both finances and the timing of retirement. Among people who left the workforce earlier than planned, 54 percent say they did so because of health problems or disability. And 44 percent of retirees say they have spent more than expected on health expenses.

Hopefully people will now realize that they cannot just spend money arbitrarily and think that all will be well. Prosper along with its affiliates have been preaching this message for four years now.

With everybad event, there is something of equal positive value happening; some indicators suggest that the nation’s long-low savings rates is starting to rise, although a decisive shift is not yet clear.

Workers can set the stage for a good retirement if they save just 6 percent of their paychecks in savings, with a 3 percent employer match, and invest prudently. A key challenge, of course, is that so many people fail to do this. Unfortunatly, Social Security thus plays a huge role in US retirement, and some experts say more government policies will be needed.

One area, which promises to be a central focus in the election campaign, is chow to ontrol healthcare costs.
Another is how to get more Americans to build up personal savings.

The one thing I fear is that the governments role in “taking care” of its aging population will come with its own nefarious problems. Mainly a dramatic increase in tax subsidies to finance what are sure to be expanding government sponsered retirement plans. This in itself could cause more pressure on an unstable economy.

Sty tuned. A bunch will happen after this years election.

BYy Brice Hogan Financial Resource Advisor

You are turning 50 and you realize that everything you have done to save for retirement (or not done) is about to come due. Looking at your banking account it doesn’t look promising. In fact it is down right depressing. Your retirement accounts resembles Al Capone’s secret vault, empty and lots of cob webs. .

Of course during your working years you had promised yourself that you would diligently put money into your company sponsored plan or open an IRA with Fidelity. Instead life happened you had to pay a mortgage, this or that emergency occurred, kids etc… What ever the case is we always have good intentions about getting our retirement going but it just doesn’t happen.

Here are some statistics about baby boomers retirement situation.

40 percent of Boomers are not sure if they will have enough money to live comfortably.

One-fourth of Boomers do not think they will have enough money to retire. Male Boomers (50 percent) are significantly more likely than females (34 percent) to think they will have enough money to live comfortably in retirement.

57% of Workers age 45 to 54 have less than $50,000 saved.

This is unfortunately the norm and not the exception that most people are unprepared going into retirement. So at this point you are going to need to play catch up and here is what you need to start doing.

Take Advantage of Retirement Plans

If your company offers a retirement plan grab it and take advantage of it. Company matches are free money and you need all the extra money you can to jump start savings for retirement. Increase your percentage you contribute as well. If you contribute 10% try boosting it to 15% - 20%.

Your prime years for earning are in your 50’s so take advantage or a raise that you get during the year. If you are able to stash away the equivalent of $10 a day in you r 401(k) that will boost your savings by more than $100,000 over 15 years at a return of 8%.

Here is a kicker the government ever recognizes the fact that people start to save late for retirement. It gives you an advantage over younger savers. Right now you can normally contribute to an IRA $5000 a year. With the catch-up provision that is an extra $1000 a year so you would be able to contribute $6000 instead of $5000. So if you have an existing $30,000 in savings and use a catch-up amount you will have $271,111 over 15 years. Not to bad.

The other benefit you have with retirement accounts like IRA’s is that you have the ability to deduct that amount from your tax bill, and if you are behind on your retirement savings, your tax bracket will probably be lower in retirement.

Define your target goal what are the amounts that you need to save for retirement, what is the income you will need to live in retirement. Fix these goals in you mind and then go out and find what it takes to achieve it. You can go to www.Dinkytown.com for some retirement calculators to help.

Be mindful of your spending.

Chances are if you are 50 and nothing saved you have developed some bad spending habits that have contributed to you not having that desired nest egg. The biggest problem it seems is that you spend more than you can afford. That is a very common bug that gets the majority of people. So make a budget, if you have a budget revise it, fine tune it so that you know where your money is going.

One thing, if you have kids about to go to college or are in college instead of paying for them you might want to consider having them get gov’t loans, grants, or if they can apply for scholarships. The advantage here is your money goes to your retirement and your kids can still get an education.

You Spend a long time in retirement

Investing and the choice of investments are very important. Don’t be afraid to be a little more aggressive investing, just don’t be stupid. That means that you have about 15-20 years before you retire even at 50. The chances that one of you will live an additional 20 years to 90 is about 50% With that amount of time you will mostly likely go through a complete stock market cycle.

For your investment choice your allocation should be between 60% - 80% in some sort of diversified stock fund. Most people that have more money have the luxury of being a little more conservative, but you don’t so be a little aggressive with but not overly aggressive.

Downsize

Up until now you have had the family life. You have bought a house to accommodate the family you have raised. Now all that space sits empty or at least most of it. It might be a good idea to get into something more reasonably sized and less expensive. By doing so you cut some costs that you can use to continue to boost your retirement funding.

Working in Retirement

It is a fact that more and more individuals over the age of 50 have to work in the retirement years. There are a couple of options you have to contend with here:

1. It might be to your advantage to stay with the company your with even if it is not your dream job. The fact is you need to save and your current employer offers some security and income. Eventually you might be able to move into something more part-time and to your liking.

The other advantage is the longer you work the more it puts off having to dip into your retirement savings and social security checks. This has the ability to increase your withdrawal % at retirement.

2. You can switch jobs that pay more money if that is an opportunity it is one that you should jump at. Overall that can help you increase your contributions.

3. The least desirable is work longer, but the benefit is that according to a Merrill Lynch Retirement survey a typical 50year old with a household income of $62,500 and a savings of $60,000 would have to put away $12,500 every year in today’s dollars to retire at age 62. That number would drop to between $3750 and $7500 if he worked full time until age 64 an part time until 75.