Real Life Retirement Pulse

According to the recent quarterly Real Life Retirement Pulse survey from Charles Schwab, three in ten investors believe they should contribute 10 percent of their income to retirement; yet, according to Schwab, twice that number of investors – 60 percent – are allocating less. Actually, 20 percent of those surveyed are saving nothing for retirement.

Growing Life Expectancy

Today, a man's average life expectancy at 65 is 17.2 years (to age 82), roughly 32% longer than in 1970, when he could expect to last, on average, another 13.1 years. A 65-year-old woman today can expect to live another 20 years, on average, compared to 17 in 1970.

National Alliance for Caregiving Stats

More than 50 million adults, teens and children are caring for chronically ill, disabled or elderly family members or friends, according to the National Alliance for Caregiving. Thirty percent of the caregivers are older than 65 themselves.

Caregivers average 20 hours a week of assistance per week and provide an estimated $306 billion in care each year for free. That's almost twice what Americans spend on home care and nursing home services combined, according to the Alliance. The median income of caregiving families is 15 percent lower than others'.

Centenarians

The fastest-growing age group in America is 100-plus. Its numbers have jumped from 37,306 in 1990 to more than 96,000. By 2040, American centenarians will number 580,000, per Census Bureau estimates. Retirement could last as long as their careers, or possibly longer for these centenarians.

Early Retirement: A Thing of the Past?

From the 1960s to the 1980s, the trend was to retire early. The average retirement age sank to 62, from around 67. Since then, as pensions have withered, that trend has been reversing. The average retirement age is now about 64.

Biting the Principal

Drawing income from a portfolio without biting into the principal was less challenging in the 1970s and 1980s than today. According to Morningstar's Ibbotson SBBI (stocks, bonds, bills, inflation) yearbook, T-bill returns from 1970 through 1989 averaged 7.6% and inflation averaged 6.2%. Americans could thus invest in T-bills or other cash equivalents, such as bank CDs and money market funds, and pull out 7% to 8% a year without dipping into their principal.

Not so today: Ibbotson put the T-bill return in 2009 at 0.1%, and for the past 10 years, it's been only 2.8%. The result is that in this low-yield century, it might be necessary to tap principal in order to pay retirement expenses.

Canadian Debtors

Two new surveys indicate Canadians intend to carry significant amounts of debt into retirement. First was Investors Group which discovered 62% plan to carry debt, such as a mortgage, into their golden years. Then Royal Bank of Canada released a poll that found 39% of boomers 50-plus have already entered retirement with some debt.

True Motives

Wells Fargo Institutional Retirement and Trust has released the results of a survey that shows the majority of U.S. companies have not adapted to their increasingly central role in helping Americans achieve a secure retirement through company-sponsored 401(k) plans. Most employers have been slow to grasp the implications of a private-sector workforce shifting from earning a pension for life to managing their own retirement.  In fact, employers still view retirement plans mainly as a benefit rather than as the primary means for their employees to support themselves after retirement. Fewer than half (45 percent) say the "primary" goal of offering a retirement plan to their employees is to "provide employees with the means to achieve a financially sound retirement." Rather, the majority (51 percent) say the primary reason they offer a retirement plan is to "provide competitive benefits to attract and retain employees."

Retirement Projects

The Retirement Savings Project, a leading policy research group backed by The Brookings Institution, The Heritage Foundation and Georgetown University, and affiliated with FINRA and the AARP, is advocating new approaches for defined contribution plans, Social Security and tax policies to insure Americans' retirement future.

The Retirement Security Project, in turn, is part of the group called Retirement Made Simpler, which is a coalition of RSP, the AARP and FINRA, both of which are respected advocacy, regulatory, and policy organizations. The campaign was created specifically to provide companies with the tools and information they need to automate their 401(k) plans, including real-world experience from other companies that already have made the switch.

Maintaining a Pre-Retirement Standard of Living

The average U.S. employee will need more than 15 times their final pay in retirement resources to maintain their current standard of living during retirement, according to a new analysis from Hewitt Associates. As a result, four out of five workers are still expected to fall short of meeting all their financial needs in retirement unless they take action to improve their savings habits or retire at a later age.