Think about this: About 18 percent of all the people employed in the U.S. in 2013 will be retiring in the next five years. That is a lot of gold watches and Social Security checks.
This number was calculated by the ADP Research Institute, an arm of human resources and payroll management company ADP. As a part of this research, the company also looked at retirement savings rates. It concluded that employees who are on the verge of hanging up their work boots are scrambling to salt away enough at the last minute to live comfortably, with 64.4 percent of those age 61 and older saving an average of 9.2 percent of their income -- the highest percentage by far of any age group.
Retirement savings by age group
|Age group||% of employees who saved||Savings rate|
Source: ADP Research Institute
ADP predicts that these last-minutes efforts won't be adequate to ensure a comfortable retirement for many. It blames inadequate retirement planning on a sea change in the U.S. retirement system over the past 30 years that shifted responsibility from employers and old-fashioned defined-benefit pensions to workers and do-it-yourself defined contribution savings plans like 401(k)s.
Many people didn't grasp the impact of this change in time to respond and as a result, "Many may need to work much longer than they wished or face a stark financial reality. Social Security alone is often not sufficient to avoid poverty in old age," ADP says.
ADP also found that younger employees seem to be getting the message and finding the discipline to save while they still have time on their side. For instance, among those age 20 to 29 earning $30,000 to $45,000, nearly half (48 percent) are saving an average of 3.9 percent. Women in that age group are doing the best job of saving, with 56 percent saving an average of 5 percent.
The message for boomer parents of adult children is clear. "Make them aware of the importance of savings. If they save early, they can take advantage of compound interest. Even if they save less, they'll end up with more," says Ahu Yildirmaz, vice president and head of the ADP Research Institute.
In other words, tell your kids to do what you say, not what you did.
Are you ready for retirement? Are you contemplating an increase in the percentage of your income that you're saving for retirement?
For more, read "You Can't Hide From Retirement Math"