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Crisis shows no signs of retiring

The U.S. is facing a retirement crisis. Most workers are saving too little, according to the Employee Benefits Research Institute. And workers are acutely aware.

An institute study found that the percentage of workers saving for retirement dropped to 66 percent from 75 percent in 2009. One third said they had saved nothing.

Of those surveyed, 28 percent had no confidence that they would have enough to retire comfortably and 21 percent were “not too confident.”

Meanwhile, many of those facing a pinched retirement planned to work beyond the minimum retirement age for Social Security of 62.

Living only on Social Security guarantees a frugal retirement. Benefits max out at $1,320 a month, $15,840 a year, at age 70. And Congress may shave that formula for future retirees.

At one time, workers relied on company pension plans, but those have almost disappeared. In fact, EBRI left them out of calculations because only 3 percent of workers are still covered by them.

Those traditional plans have been replaced in part by plans like 401(k)s, but workers tend to dip into them for emergencies and other nonretirement purposes. Retirees can no longer count on high interest rates on their savings to generate income.

Retirement money has to stretch further because we’re living longer. According to a report by the Society of Actuaries, a male who turns 65 this year can expect to live another 20.5 years, a female another 22.7, an increase of roughly a year each over the decade.

The problem is no less real for being slow-moving, but it’s better to deal with the retirement financial crunch sooner rather than later, whether through better savings instruments, more incentives to save or even mandatory savings requirements. As anyone older 65 can attest, you’re old before you know it.

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