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Financial Planner Says Americans Not Saving Enough for Retirement

The U.S. may be the wealthiest nation in the world, but it's not so wealthy that most of its citizens can forego saving for retirement. Yet few do so adequately, according to certified financial planner Mark Johannessen, a Senior Planner with the financial advisory firm of Sullivan, Bruyette, Speros & Blayney.

Johannessen told attendees at the SVIA Forum that Americans save too little for a variety of reasons. Many underestimate the amount of money they'll need in retirement, or have unreasonable expectations about their ability to work past normal retirement age to supplement their retirement savings. Some are able to save, but are simply unwilling. Developing a convincing message that will encourage Americans to have better saving habits and to improve their odds of achieving financial security in retirement, he said, will depend in part on understanding these hurdles and the other variables that impact people's ability to retire.

The most important variables, Johannessen said, are those that people can control: when they retire, how much they save between now and then, and their spending levels once they stop working. Other important but less controllable factors, he said, include the amount of retirement savings they've already put aside, their future investment returns, their life expectancy, their health outlook, and the rate of inflation.

Given these variables, Johannessen said the financial services industry must continue to help people assess their resources, establish realistic spending goals, develop plans to reach their goals, implement those plans, and monitor their progress. As part of that effort, he added, the industry must work to counter the decline in the percentage of workers who are not participating in their employer-sponsored 401(k) plans. Participation rates fell to 72.6 percent in 2003 from 77 percent in 1999, he said, adding, "We need to do everything we can to change this trend." He said convincing people to calculate their retirement needs early in life would promote greater participation in retirement plans.

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