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Saving for retirement must be a priority in tight times

Americans are dealing with crushing financial pressures — recession, stagnant wages, burst housing bubble, anemic job opportunities, skyrocketing health care expense, gridlocked government and rising global competition. • All of it is keeping researchers busy, and the latest studies spell out serious challenges for both younger and older adults. • The latest studies show serious challenges for both younger and older adults. One study finds adults up to about 40 in age have accumulated less wealth than their parents did at the same age, even as the average wealth of Americans has doubled over the last quarter-century. • "The young increasingly have been left behind," concludes the Urban Institute study called Lost Generations. "Often lost in this debate is attention to younger generations whose wealth losses, or lack of long-term gains, have been even greater" than the baby boomers or their parents. • Another analysis concludes that, even in this so-called improving economy, 28 percent of Americans are not confident about saving enough money for retirement. That is the highest level in the 23 years that the Employee Benefit Research Institute has tracked retirement savings. Among U.S. workers, 57 percent surveyed by the EBRI reported less than $25,000 in total household savings and investments, excluding their homes. Only 49 percent reported having so little money saved in 2008. That's downright scary.

"Retirement savings may be taking a back seat to more immediate financial concerns," warns the EBRI report. "Just 2 percent of workers and 4 percent of retirees identify saving or planning for retirement as the most pressing financial issue facing most Americans today." What is the biggest worry of both younger workers and near-retirees? Job uncertainty.

When young adults just getting started in their careers and older workers trying to transition to retirement both end up with similarly ugly financial outlooks, something is seriously wrong.

Is this a low point that will be corrected with an uneven but still increasing uptick in the economy? Or is this a broader, deeper economic malaise — an early warning signal that the good old days may take much longer to regain, if they are retrieved at all?

The Tampa Bay Times reached out to several area financial advisory pros for guidance. We sent them copies of coverage of the Urban Institute and EBRI studies and asked them for reaction and how they might counsel a younger person in the workforce and a older person anticipating or already in retirement.

Most of their feedback was sobering. Let me summarize. We lack discipline to save properly. We do not control our personal spending. We fail to seek higher education (or spend too much doing so). We rarely live within our means. And our government seems incapable of solving critical challenges.

"I'm not giving up on America and its ability to solve these problems," says veteran certified financial planner Ray Ferrara, CEO of ProVise Management Group in Clearwater. "Having said that, and without getting too much into the politics, it's going to take better leadership than we have today."

Adds Bob Doyle, a CPA and president of Doyle Wealth Management in St. Petersburg: "There are a lot of places to point fingers — the financial crisis, a tech bubble, the decade of 0 percent returns — but at the end of the day, employees must be responsible for providing for their own retirements.

"Unfortunately, many mistakenly thought that Social Security would be their pension. But Social Security, from its beginning, was intended to be a minimum safety net, and nothing more."

The Urban Institute found that younger Americans face stagnant pay — though I suspect many Floridians of all ages get paychecks that have stalled for years. The study found that median income, when adjusted for inflation, has declined since its peak in 1999. Add to that the housing collapse, with Florida home values down some 40 percent since their peak in 2006.

Many younger home buyers got stuck purchasing a house near the top of the market and have struggled with a mortgage worth more than their residence. And don't forget the soaring student loan debt that's crimped many young adults' abilities to start a life of their own.

Tampa certified financial planner Jon Wax, CEO of Waller & Wax Advisors, says his conversations with pre-retirees have changed regarding major expenses like college for their kids.

"Instead of assuming parents will cover all costs, they are looking into loans for their kids which they will help pay off," Wax says. "They have limited time until retirement and might not be able to afford so much money going to college expenses. At the same time, their kids have 40-plus post-college years of earning potential to pay for it."

A census report in late March says America's seniors are more likely to increase their debt and experienced the biggest percentage jump in borrowing relative to other groups over the past decade. Most of the debt increase is in mortgages — retirees increasingly still do not own their homes outright — or a growing use of home equity loans.

The rise in debt only aggravates the EBRI's measure of retiree confidence. That study found only 18 percent of retirees are very confident in having a financially secure retirement, while 14 percent are not at all confident.

"For those approaching retirement," says Ferrara, "their choices are much more limited, and frankly, quite uncomfortable. Their choices are to work longer and/or reduce their lifestyle, both while still working and in retirement."

All in all, grim views for working folks getting squeezed both at the start and the end of their careers.

The bottom line: Take some action and responsibility to get your financial house in better shape.

Robert Trigaux can be reached at

Have a written

financial plan.

This isn't an easy process, and that's why a plan increases the odds of success. Just as you wouldn't build a house without a set of architectural drawings, you shouldn't build your financial house without a written plan.

Ray Ferrara,

ProVise Management Group, Clearwater

Many workers will need to look at retiring after age 70.

Those in their 40s, in good health, need to plan for a retirement into their 90s. When Social Security was founded in the 1930s, the retirement age for benefits was 65. The life expectancy for those who first started receiving benefits was also 65. Thus, it was designed to pay out for only a few years.

Bob Doyle,

president, Doyle Wealth

Management, St. Petersburg

Younger workers are in a tough


Those not yet in college should put more emphasis on the cost of education versus the earning potential of their desired field. If their career will have a low rate of income, a private, out-of-state university with high tuition may be a poor choice.

Jon Wax, CEO of Waller & Wax Advisors, Tampa

Saving for retirement must be a priority in tight times 03/30/13 [Last modified: Saturday, March 30, 2013 8:59pm]
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