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Saving Too Little For Retirement?

A survey by Fidelity Investments found that 83 percent of workers recognize that they are saving too little for retirement, up from 78 percent a year ago. The survey also found that American workers are saving at a rate that would allow them to replace 57 percent of their present retirement income.

Meanwhile, more than 70 percent of respondents to a Prudential Financial survey expect to work during the first 10 years of retirement as they play catch-up.

Plan before retirement
There are several ways to ease the retirement blues. Make certain you are putting the allowable maximum into company savings, such as a 401(k). Consider also having your paycheck deposited directly to savings rather than to your checking account–you can transfer money to pay bills, but you’ll think twice about withdrawing extra cash. And subtract credit-card purchases immediately from your checking account, so you won’t be surprised when the bill arrives.

Christine Fahlund, a senior financial planner with T. Rowe Price, says that 5 to 10 years before retirement you should bank your pay increases and consider ratcheting down your lifestyle.

The percentage of retirement-age households with more than 40 percent of their income going to credit cards and other loans has doubled to 14 percent since 1995. To avoid piling on new debt, you may have to make hard choices, such as putting the brunt of borrowing for college on your kids. And step up repaying of loans, especially high-rate credit cards.

Taking these steps won’t guarantee you a financially secure retirement, but it will certainly improve the odds.

Balance your risks
“New retirees, meanwhile, have to balance (stock) market risk, longevity risk, and inflation risk,” says Tom Fontaine, a senior portfolio manager at AllianceBernstein. And the biggest risk for a new retiree, he points out, is longevity. His asset-allocation model for a person age 65 is a 35 percent weighting in government bonds; by age 80, the bond weighting jumps to 65 percent.

Retirement has become a long-term affair, with investment strategy a key element of security.


Mary Hunt, editor of Cheapskate Monthly, has tips on trimming expenses before you retire. Call (800) 550-3502 or go on the Web to

Would a reverse mortgage help in retirement? Learn more about reverse mortgages and get an estimate of the worth of your house at

Plan how to create a “paycheck” from Social Security, savings, and other assets with a budget worksheet from the “Retirement countdown” link (right-hand side of page) of TIAA-CREF, online at

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