LIMRA: Are Pre-Retirees Like the Grasshopper or the Ant?

07/12/2010 Share 0 comments

John Sullivan on investmentadvisorcom wrote the following:

According to the report, “Scaling the Pre-Retiree Market,” the majority of the 30 million pre-retirees is woefully unprepared for retirement, so much so that it might change the essence of retirement.  Consider the following:

·   Just 30% of pre-retirees believe they are very prepared for retirement.

·   Fifty-five percent have less than $100,000 in household investable assets.

·   Participation rate for employer-based retirement plans is less than half for pre-retirees (55-64) in the private-sector workers. Overall, participation rate for full-time pre-retirees is 63%.

·   While almost a third of pre-retirees say they have no plans of retiring, in a separate 2009 LIMRA study, 56% of retirees retired before they expected; 43% were involuntary. So the option may not be theirs.

·   On average, pre-retirees across all household income levels have failed to save enough for retirement with 91% having lower-than-recommended asset-salary ratios. The average pre-retiree retiring within the next five years on has 43% of recommended savings in his or her current employer’s retirement savings plan.

·   There is a consensus among pre-retirees that they will need 65-70% of current income in retirement. Only 43% of pre-retirees are confident that they will be able to achieve their desired retirement lifestyle (younger women and lower-income pre-retirees are less confident).

Preparing for retirement is something people psychologically do not want to deal with: humans have a nature to postpone and procrastinate. Investing, a daunting task under constant noises and false guidance everywhere, only makes this step harder. The very first step is to, just as a kid facing the homework deadline, sit down and review your situation. You then get yourself educated, filtering out constant financial media noises, hypes and rumors. Remember, Simpler Is Better. Be Balanced, control both greed and fear. Put yourself onto a solid ground. Suddenly you will find things are not that bad and complicated. 

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