Is
Worker Retirement Confidence Justified?
In
a recent survey, two-thirds of workers expressed confidence in having enough
money to live comfortably throughout their retirement years.1
Is this confidence justified?
One way to tell
is by looking at current attitudes and behaviors about retirement.
Setting a Target
Only 42 percent of workers have tried to calculate how much
money they will need to save by the time they retire.2
Unfortunately,
without a goal, it's difficult to know whether you are on track.
Taking
Advantage of Tax Deferral
About 39 percent of workers participate in a workplace retirement savings plan,
such as a 401(k). And only 42 percent of workers report that they currently have
an IRA or some other tax-qualified savings plan outside of work.3
Tax-deferred
savings plans can be powerful vehicles to save for retirement — but they
appear to be underutilized.
Investing
for Growth
Many people saving for retirement are not investing for growth.
In fact, 40 percent of workers do not own stocks or mutual funds.4
Historically, the
stock market has provided the best opportunity for long-term growth. In the last
25 years, stocks averaged 13.84 percent annually, whereas three-month Treasury
bills produced a 6.61 percent average annual return.5
Of course, past performance cannot guarantee future results.
Although many workers feel comfortable about their retirement progress, the
numbers indicate that they may be too complacent. We can help you evaluate your
options.
1-4) 2004 Retirement Confidence Survey, Employee Benefit Research
Institute
5) Wiesenberger, 2004, for the period 12/31/1978 to 12/31/2003. Stocks are
represented by the Standard & Poor's 500 Composite (total return), an
unmanaged index that is generally considered representative of the U.S. stock
market. T-bills are represented by the Salomon Brothers Three-Month Treasury
Bill Index. These returns do not reflect fees, brokerage commissions, or other
expenses typically associated with investing. The performance of an unmanaged
index is not indicative of the performance of any specific investment.
Individuals cannot invest directly in an index. Actual results will vary. The
return and principal value of stocks and mutual funds fluctuate with changes in
market conditions. Shares, when sold, may be worth more or less than their
original cost. Treasury bills are backed by the full faith and credit of the
U.S. government as to the timely payment of principal and interest. The
principal value will fluctuate with changes in market conditions. If not held to
maturity, T-bills may be worth more or less than their original value.
