Sun Nov 08 2009
By HEATHER BAUGHMAN
A group of economists from the University of Wisconsin think people are socking away too much money for retirement. Based on a study by a trio of authors, the report, "Are Americans Saving 'Optimally' for Retirement?" concluded that Americans are saving too much for retirement... and not having enough fun with their money today.
Area investment advisors, however, disagree.
"I don't think you could ever save too much for retirement," said First Insurance and Investments financial advisor Shari Wyse. "In general, from things I've read and seen, most people aren't saving enough money for retirement."
Phil Recker of Edward Jones Investments of Paulding agreed with Wyse. "You can never be overly prepared when it comes to your financial future," he said. And, he added, "The earlier you start saving, the better."
Recker said he typically "finds people under prepared rather than underprepared." And with the future of social security in question, Recker said, "it is very important for people to start taking saving for retirement into their own hands.
"IRAs that are available these days offer a great tax benefit for those who qualify. They are great for saving for retirement."
Rather than spending a bonus check or blowing extra money left over from a paycheck, local investment and retirement advisers urge people to think about their post-working days and how their money will sustain them in their later years.
When considering saving for retirement, first and foremost, Wyse said, people are not taking advantage of the simplest means for retirement savings... company 401K plans, most of which come with some sort of company match. "Basically, it's free money," she said.
The second step people need to take to prepare for a financially healthy retirement is to "talk to someone and develop a plan that will help you meet your goals," Wyse said.
"It is important to have a goal, and once you've established a goal, you need to establish a plan to help you reach that goal," Recker said.
He also stressed that "it is very important to start retirement planning at an early age." Too often, Recker hears people say, "Oh, I'm not going to retire for another 30 years. Why should I prepare for retirement today?"
According to a 2006 retirement confidence survey by Employee Benefit Research Institute, "More than half of workers saving for retirement reported total savings and investments (not including the value of their primary residence or any defined benefit plans) of less than $50,000 (52 percent). However, the large majority of workers who have not put money aside for retirement have little in savings at all: Three-quarters of these workers say their assets total less than $10,000 (75 percent)."
While many people feel that living for today is more important than saving for tomorrow, reality could haunt them in their retirement.
Even though the University of Wisconsin report concluded, "We find strikingly little evidence that... households have undersaved," reality, at least in northwest Ohio, appears to differ.
"Who knows where social security will be in 15-20 years," Recker said.
And while many people rely on their company 401K plans and dreams of social security checks during retirement years, Recker said, "It is very important that people see a professional financial planner to retire happy."
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