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Have you saved enough?

April 28, 2019

My husband and I are extremely fortunate that we had a retirement plan which has allowed us to live a contented lifestyle. Our employers offered plans to help us save, and we did so diligently.

The word “retirement” used to conjure up a cartoon of a granny and grandpa rocking away in front of a cozy fire. But today’s retirement photo looks very different.

Many of those elders are active and working well into their 70s and 80s, not by choice, but because they need the money for housing and food. And it’s hard to say how many seniors want to retire but are afraid they might not have saved enough.

In early April, Reps. Lisa Blunt Rochester of Delaware, Scott Peters of California, and Lucy McBath of Georgia introduced the Saving for the Future Act, new legislation to address the nation’s retirement savings crisis.

Blunt Rochester’s press release of April 8 states, “The Saving for the Future Act establishes a minimum employer contribution to a savings plan of 50 cents per hour worked, which equals $20 per week and more than $1,000 per year. Over the last 50 years, retirement savings have declined by a dramatic 75 percent, and stagnated wages and an ever-increasing cost of living pose real challenges to retirement security for all Americans. Now more than ever, benefits should follow the person, because most people don’t work for one company for their entire career.”

Many of us are painfully aware of this fact, as we watch our adult children navigate an entirely different scenario from ours. It’s not uncommon to see this next generation change careers every couple of years.

Writer Amelia Josephson claims to be an expert in retirement. In her article “Average Retirement Savings: Are You Normal?” (SmartAsset, April 15, 2019), she writes, “Around half of American households have no retirement accounts at all. No 401(k), no IRAs, nothing. You might think that’s because they’re all expecting pension income in retirement. In fact, according to the Government Accountability Office, around 29% of households age 55 and older have neither retirement savings nor a pension. Conventional wisdom has been that saving between 10 and 15 percent of your salary each year will get you on your way to a comfortable retirement ….”

Why don’t many people save for retirement?

Josephson’s answer is this: “There are two very good reasons. One is that our brains have a hard time giving up present reward for future reward, especially when that future is decades away…We can’t picture ourselves choosing between food and prescription drugs in our old age, but we can picture what we’d do with our paychecks in the here and now.”

I recall trying to teach my own children the value of savings. We would take their allowance or babysitting money to the bank and watch the teller hand them their deposit slips. It looks like they are managing their finances well today, but there is little extra to save.

This legislation sounds like a good thing. But I suggest that instead of employers footing the entire bill, each employee contribute 25 cents for every dollar earned, just like my children had to do to help buy their Nintendo games.

Correction: In my March 1 column titled “Seniors with big hearts,” employees of Seniors Helping Seniors are not paid the minimum wage, but between $11 and $15 an hour. Their contact info is: Seniors Helping Seniors In-home Service, www.seniorcarerehoboth.com, email info@SHSDelaware.com, phone: 302-858-7330.