Retirement clock running down? Time to act is now

Studies show older workers need to put more money away

Some of us are earning more and saving more for retirement than we were five years ago, but is it too little, too late?

More than a quarter

(28 percent) of working Americans surveyed by Bankrate.com said they are saving more for retirement in 2018 than they did last year, while 13 percent reported saving less. The percentage of respondents who said they are boosting their savings has climbed each year for the last four years, according to the website.

“After the financial crisis, there was a notable shift, with people recognizing the importance of savings. But when wage growth was tough to come by, we didn’t see the savings needle move because people really couldn’t do anything about it,” said Greg Mcbride, Bankrate’s chief financial analyst. “Now the needle is starting to move and people are putting away more money.”

Other studies suggest they need to. A new survey of employers by Transamerica Center for Retirement Studies finds just 16 percent are very confident their employees will be financially secure in retirement, and just 18 percent of workers are very confident they will fully retire and live comfortably.

“That’s a very discouraging result,” said Catherine Collinson, president and CEO of Transamerica Institute. She said the numbers could improve substantially if more employers offered phased retirement, help with retirement income planning and better overall retirement plan design.

But how much employers really care about improving their plans is debatable.

In the Transamerica survey, 14 percent said they feel very responsible for helping employees achieve a financially secure retirement, with 41 percent feeling somewhat responsible. Even narrowing the field to just the

companies who already offer a retirement plan doesn’t boost the numbers much. Just 19 percent feel very responsible, though another 50 percent feel somewhat responsible.

A few takeaways from both surveys:

■ Mind your own rate. While it’s instructive to learn what others are doing — and important from a policy standpoint to advocate for better plans — the retirement buck really does stop with you. Most experts now recommend saving 15 percent of pay if you earn at or above median U.S. income, now around $59,000. Lower income workers might get by saving less because a higher portion of their incomes presumably will be covered by Social Security. Very high income workers will need to save even more.

■ Be aware of culture. A lot of employers give lip service to the value of older workers’ experience, but the reality is employers still discriminate, so it pays to invest in ways to stay vibrant. In the Transamerica survey, when asked how old is too old to work, workers said 75. Employers said 70.

■ Be choosy in the job market. If you manage to score multiple job offers as the jobless rate continues to shrink, compare retirement and health benefits closely. A slightly higher salary won’t make up for a bad plan.

■ Don’t wait for a better system. The Center for Retirement Research offered up several policy suggestions earlier this year for improving the U.S. retirement system, but you don’t have to wait around for the government to act. On your own, you can tackle most of CRR’S wish list: When you leave a job, figure out the 401(k) rollover rules and determine if it’s best to stay in the plan or go. Understand fees and adviser conflicts of interest. Don’t take money out of a 401(k) early. Find the best strategy for claiming Social Security and coordinate that with your retirement plan withdrawal strategy.

On that last point, it would certainly be easier if policymakers encouraged all those items, but if your retirement clock is running down, don’t sit around and wait.