RETIREMENT Younger workers fail to save for future

Nearly one-third of American workers have neglected retirement savings.
CHICAGO TRIBUNE
Even as younger workers watch parents and older generations go back to work after retiring because their savings were not adequate, they still aren't doing enough to provide for their own financial futures.
Twenty-nine percent of American workers say they have not begun to save for retirement, and 61 percent have not calculated how much they'll need to save to reach their retirement goal, according to a recent survey by the Employee Benefit Research Institute in Washington.
Jeff Hinrichs, 28, of Chicago, said he'll probably be 40 years old before he can start socking away money. Meanwhile, he has to pay off about $30,000 in student loans and a $30,000 hospital bill from a three-day stay a few years ago to control his diabetes.
"It's hard to save for retirement unless you're Bill Gates," Hinrichs said recently, while shopping for music CDs. "I have too many other bills to think about saving."
Hinrichs also has seen how unexpected events can impact retirement savings by watching what has happened to his father, 59, and stepmother, 52.
Both have good jobs -- he's an administrator for the United Way in Baton Rouge, La., and she inspects nursing homes. But they blew a chunk of their retirement money on two homes that needed expensive repairs. The houses were purchased as a result of job changes.
"They're putting money away, and they do have a little bit of a nest egg, but it's not as great as it used to be," said Hinrichs.
Longer lives
He remains confident he will be able to retire comfortably, though he hasn't saved a penny. In the back of his mind, Hinrichs still hopes he will hit the lottery or sell for millions of dollars a movie script he has written on the side.
Many people dream of having luxurious retirements, but rarely do things turn out the way they planned, said William Gale, senior fellow of economic studies at the Brookings Institute in Washington.
Today's younger workers not only face longer life expectancies -- many may live well into their 80s and 90s -- they also will have to work longer to maintain their lifestyles. Otherwise, they risk sliding into poverty when they're too feeble to work.
"Something's got to give," Gale said. "If people work longer, they not only have more income from which to save, but they have a shorter retirement to finance. Both make it easier to accumulate wealth."
Changing lifestyles
Generation Xers born between 1960 and 1980 face other obstacles to building nest eggs. Many are mired in credit card and college debt while experiencing extended periods of joblessness as they work in industries hit hard by swings in the economy and the movement of jobs overseas.
Younger people also marry and buy homes later than previous generations, and that doesn't help their finances.
"I think that waiting longer to do everything from child-raising to buying a home will put them a bit behind the eight ball in terms of building wealth," said Don Blandin, president of the American Savings Education Council. "If you stay single or even live together paying rent, you won't have the tax advantages of someone who is married and has a home."
Workers in their 20s and 30s often need a second household income to make ends meet. Many singles share the rent and -- now that society no longer views people of the opposite sex living together as taboo -- more couples are living together.
But even with two incomes, most aren't saving any more for retirement.
"A lot of Gen Xers are in a two-income trap," said Ron Zemke, author of the book, "Generations At Work: Managing the Clash of Veterans, Boomers, Xers and Nexters at Work." "They can't give it up because of labor-market instability. So they're caught sharing expenses and renting an apartment longer than they wanted to be."
Safety net
Blandin suggests workers closely examine the Social Security statements they get in the mail every year, put together a retirement plan and alter it when necessary.
"It's like any goal," Blandin said. "You have a plan. It's not set it and forget it. You have to fine tune it every year," Blandin said.
Such planning is more critical for young people as traditional safety nets such as Social Security, employer-funded pensions and company matches to 401(k) accounts can't be counted on.
Those who fail to plan and save for retirement are deciding they will work into their 70s or 80s or will never retire.