Don’t know what you’re having for dinner tomorrow night?
Can’t RSVP to a social function two weeks from now because you don’t know your plans?
That’s the problem with your retirement.
When even short-term planning is devalued, the notion of pausing to envision what you’ll need years or decades from now is almost impossible, said Carol Bogosian, president of CAB Consulting.
Bogosian serves on a Society of Actuaries committee that has been polling preretirees and retirees since 2001 about their concerns about retirement.
Not surprisingly given the current economy, this year’s study (based on a 2011 poll of 1,600 adults age 45 to 80) noted increased concerns about keeping up with rising retirement costs, including health care.
And still, just 35 percent of preretirees said they have a plan for how much they will spend in retirement and where the money will come from. Even among retirees, only 57 percent said they have a plan, though that number has risen from 44 percent in 2005.
“There’s some evidence that younger generations are thinking more toward the future, but they have a lot of challenges,” she said, noting the long-term effects of the housing crash and recession.
A separate study by Towers Watson found that from early 2009 through mid-2011 the percentage of workers under 40 who said their employer’s retirement plan was an important part of accepting their position jumped to 63 percent from 28 percent.
More Top Picks Instant Pot Duo60
“It’s interesting to see how health care and retirement benefits are moving up the ladder in importance among younger employees,” said David Speier, a senior consultant at Towers Watson. “Health care is now No. 3, and retirement is No. 8, which used to not even make the list.”
Simply recognizing the importance of retirement savings is important, but the real issue is translating the concern into action, particularly among middle-class savers who won’t have access to either dedicated wealth managers or public safety nets that replace most of their income in retirement, experts said.
Education alone hasn’t moved the needle much, said Anna Rappaport, chair of the committee that published the Society of Actuaries survey.
Employers’ increasing use of automated 401(k) enrollment features has had an effect, however, as will continued experiments with getting savers to match their behaviors to their concerns about the long term, Rappaport said.
How to get your own brain to think long term?
Check out Living to 100 (livingto100.com) for a quiz that will help you find out your likelihood to make it to the century mark. The Internet also has several age-progression tools (age-me.com, in20years.com) that can give you a visual on your future self, the idea being that you can use for motivation to save.
Also, make your own pact not to cash out your 401(k) plan if you change jobs, Bogosian said. She advocates for more automatic escalation features in workplace plans, where employers automatically boost contributions unless an employee opts out. She also believes employers should curtail hardship withdrawals and cash-outs when people switch jobs. Until then, she said, try to forget you have those options.
Finally, try to think about tomorrow’s dinner or that invitation sitting on the desk.
Being more mindful, and organized, about the near future can only help pave the way for longer-term thinking.
Have a retirement question? Write to [email protected]