Left unchecked the retirement crisis in America will only worsen. Steps must be taken to control the banks and the other Wall Street bullies. Investors deserve and require a top notch retirement plan no matter what size company they work for. Business owners and managers need to address this or the federal government will be forced to.

Savings rates remain very low

The median contribution level for workers in 401(k) or similar plans is 7 percent. This is up from 6 percent in 2011, but still too low a savings rate to fund a comfortable retirement. Think about it: Retirement is likely to last roughly half as many years as a career. How can you expect to replace most or all of your income if you are only setting money aside 7 percent of that income each year? With diminished expectations for the stock market, and bond yields and savings account interest rates approaching zero, most people are not going to be able to grow their way to adequate funding. Saving more is the only way to make it work.

2. Retirement targets are also too low

The reason savings rates are so low is probably that people are underestimating how much they will need in retirement. According to the Transamerica study, the median savings goal of American workers is $500,000 — but how many younger workers understand that inflation is likely to cut the value of that amount by at least half by the time they retire?

3. Too many people are relying on guesswork

It’s no surprise that savings rates and retirement targets seem off-base, because people simply guess at them. The Transamerica Center found that nearly half (47 percent) of respondents chose a retirement target by guessing.

4. Funding levels are off target

While the median retirement target is $500,000, the survey found that 39 percent of workers in their 60s had saved less than $250,000. That leaves them with too much ground to make up in too few years.

5. People seem to be betting on good health

The survey found that most Americans plan to retire after age 65, or not at all. Also, most plan to work after retirement. Working longer may be an inevitability for many people, but it is hardly an ideal retirement planning solution. After all, it means staying healthy enough to work productively, and that is no sure thing for people over 65.

6. Many start planning too late

It’s only natural that older workers are more focused on retirement planning than younger ones, but that is also unfortunate. The younger you are, the more powerfully you can impact your retirement savings, because you have that many more years to contribute money and benefit from investment returns. The survey found that people in their 60s are more likely to have a retirement plan and work with a financial planner than people in their 20s. The problem is that by the time you are in your 60s, your options for significantly improving your retirement funding are very limited.

Procrastination is the American way. Many ask the question why save now for something that is 30 or 40 years away. The answer is the sooner you start the less painful it is and the less RISK you need to take to reach your goals. Remember planners usually win.

Please comment or call to discuss how this affects you.