RETIREMENT Many procrastinate on savings plan

Late starters can still save for retirement, planners say.
BALTIMORE SUN
Theo Brown knows he's running late. He got married at 37. The first of his two children was born when he was 40. And at 46, with a nest egg "as close to zero as you can be," he started saving for retirement.
That was 10 years ago. Back then, a financial adviser suggested that Brown set aside $1,100 a month because of his late start.
"Outrageously high," recalls the self-employed consultant from Silver Spring, Md., who makes $75,000 in a good year. Instead, he's been saving less than a third of the recommended amount -- about $4,000 a year.
To help make up for missing savings, Brown plans to work full time until 70 -- if health permits -- and perhaps part time after that.
"I'm concerned about it. I'm not worried about it," he says of retirement. "I know I started late. I was a typical baby boomer in a way. We had a whole myth that we will be young our whole lives and listen to rock 'n' roll."
For a thousand and one reasons, good and bad, many Americans such as Theo Brown are finding themselves entering late middle age having done little or nothing to prepare for retirement.
About 26 percent of households headed by a 45- to 54-year-old didn't have an individual retirement account or defined contribution plan, such as a 401(k), according to a 2001 survey by the Employee Benefit Research Institute.
What to do
"What's the use?" many ask. But, in fact, it's never too late, financial planners say.
"You just have to start, not agonize, and think, 'I need $1 million and I don't have it,'" says Cindy Hounsell, executive director of the Women's Institute for a Secure Retirement.
"It's not hopeless. The key is action," said Jordan Goodman, author of "Everyone's Money Book on Retirement Planning," who calls the current crop of savings procrastinators the "catch-up generation."
A good place to start is to figure how much you'll need annually in retirement, so you'll know how much to save.
Compromises are likely. Late starters might stay on the job longer or work part-time in retirement, experts say. They might have to forgo cruises and vacation homes for more modest lifestyles.
Retirees had long been thought to need about 70 percent of their working income, but now recent retirees are believed to need 100 percent, if not more. Younger retirees travel, start hobbies and even launch businesses, experts explain.
"Retirement is no longer sitting in a rocking chair on a porch," said Stuart Ritter, a financial planner with T. Rowe Price Associates in Baltimore.
What's recommended
Jim Thompson, a financial planner with Harbour Financial Group in Boston, says he figures retirees will need 100 percent the first decade, 70 percent the next and 60 percent thereafter, providing they have health and long-term care insurance.
Individual needs may vary widely, experts warn. Workers need to look at their expenses today and how they will change in retirement, they say.
Will you take classes, travel or spend time at home with a hobby? Will you sell the house and move to a smaller place or to another state with lower taxes?
Will you be financially responsible for another family member while retired? Will one spouse retire before the other? What would change if one spouse dies?
Tough to predict are health care costs, unless you are one of the fast-shrinking minority who will be covered under an employer's insurance plan. Medicare -- the senior health program -- takes care of the basics, but prescription drugs and long-term care can loom as expenses for those without supplemental insurance.
Also tough to estimate is how long you'll be retired. Many people are living longer than they expected, experts say.
A 50-year-old man has a life expectancy of another 28 years and a woman the same age an additional 32 years, according to the Centers for Disease Control and Prevention's analysis of 2000 data. That means half of those 50-year-olds will die before reaching that age, but half will live longer.