Boomers Lagging In Savings Plans Putting Away Only A Third Of What They’ll Need For Retirement

A lot of people are saving more for retirement - but not the baby boomers.

Overall, Americans boosted their retirement savings by 2 percent in 1997, to $203 a month from $199 in 1996, a survey indicates. It was the third straight annual increase, not counting pension benefits and Social Security, after the figure fell to $148 a month in 1994.

Still, workers said they would need to save $660 monthly to meet their retirement needs, more than three times what they now save, according to the early-November survey by the Marketing Research Institute. The survey, involving 1,000 Americans, 18 years or older and working at least 30 hours a week, was released Monday.

Only 26 percent believe they are socking away enough. Seventy-three percent think they are saving too little. Indeed, only 40 percent say they have a savings plan, although on average they say they plan to retire at 62.

Baby boomers, those between 33 and 51, contribute most to the savings gap, the survey found. The so-called X-generation, those between 18 and 32, increased their savings by 17.8 percent in 1997, to $1,714 a year. Americans between 52 and retirement raised their savings by 42.3 percent, to $4,243.

Average savings of the baby boom generation, on the other hand fell 10.6 percent, to $2,242 annually. Savings are considered one leg of a three-leg retirement stool that includes pension plans and Social Security benefits. Analysts have long feared that most Americans are not putting away enough to continue their standard of living.

“There are many signs of growing public awareness of the crisis in retirement savings, but individuals are still not doing enough to prepare themselves for retirement,” said John Penko, vice president of Colonial Life & Accident Insurance Co., which co-sponsored the survey with the Employers Council on Flexible Compensation.

“Boomers are at their high-expense years, with savings and paying for college, and that may have caused them to temporarily redirect their financial assets,” said Ken Feltman, Employers Council executive director. “We hope that as they move toward (the years immediately prior to retirement), and they get the mortgage paid down and get the kids through college, they will accelerate their savings rate.”

The council is an association promoting 401(k) and other elective retirement plans. Members include corporations, unions, governments, universities, hospitals, accounting firms and insurers. Colonial Life is a major provider of insurance.

Despite the low savings rate and fears that Social Security could go bankrupt by 2029, younger workers are optimistic about their retirement income, believing they will receive about 76 percent of current earnings. That compares with 67 percent for baby boomers and 71 percent for those 52 and older.

Workers generally are pessimistic about Social Security contributions, saying they expect only 56 cents back on every $1 paid in.

The survey sponsors said that in order to retire on an annual income of $26,125, representing $2,177 monthly, American workers leaving the workforce today would need over $400,000 in total savings.