Status on America's retirement
At the same time, so-called life-cycle or target
date funds enable even novices to invest shrewdly. Available in 49 percent
of all 401(k) plans -- up from 12 percent back in 1996 -- these funds automatically
allocate investment options based on someone's age or particular savings target.
No surprise, then, that two-thirds of individuals tell EBRI they would welcome
life-cycle options in their plans.
Even with financial mistakes,
retirees' happiness generally ranks high. Three-quarters of retirees say they
live very or fairly comfortably, Fidelity found. And nearly half of retirees (49
percent) say they're extremely or very satisfied.
"Health is a variable that's
really hard to control for a significant number of Americans," says Fidelity's
There's one thing that casts a long shadow
on retirees' happiness and finances: health
A couple in their mid-60s will
spend an estimated $215,000 on out-of-pocket
medical expenses, excluding long-term care,
by the time they're 85, Fidelity reports.
Poor health disrupts earning power, too. That's
bad news for 63 percent of wage earners who
tell Fidelity they expect to extend their
working lives to save more. In fact, 55 percent
of current retirees left jobs one to five
years earlier than planned. Among them, 22
percent left due to illness or disability.
Half of those with poor health say they're
barely able to make ends meet.
Those who are able to work longer
often reap rich financial benefits.
Today, 7 million Americans age
61 and older have returned to work within
18 months of retiring, Putnam Investments
reports. And this "second chapter"
has enabled many to reap financial rewards.
Retirees who return to work generally save
a hefty 11 percent of earnings and report
household incomes of $86,000 on average, far
more than the $54,200 for nonworking retirees.
workers seem bullish about their prospects, too.
Fidelity found that 53 percent
expect a "very" or "somewhat"
comfortable retirement. Meanwhile, EBRI reports
that 27 percent of workers are "very
confident" they'll have enough for a
comfortable retirement, and an additional
43 percent are "somewhat" confident
they'll be financially secure. It's difficult
to tell whether their optimism is rooted in
good money habits or wishful thinking. For
example, 49 percent of workers who haven't
saved a penny for retirement nevertheless
feel confident that they'll live comfortably
in retirement, EBRI found.
Still, experts see glimmers of hope.
"We are seeing higher levels of engagement.
That's very encouraging," says Boston College
economist Tony Webb. "Add in the effects
of automatic enrollment, auto savings increases
so people are taking full advantage of employer
matching funds and the use of life-cycle funds
to help with diversification -- it's all helpful."