Retirement happens even without a plan


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Many people have surrendered to the idea that they will "work until they drop," especially if they haven't saved enough money to retire. The problem with that strategy is that a high percentage of people who are retired today had to leave the workforce before they planned due to failing health, layoffs and family issues.

Government data show by age 70 most workers have been pushed out of jobs they may have wanted to keep. The U.S. Bureau of Labor Statistics reported in 2011 only 32.3 percent of men and 18.7 percent of women age 70 or older were still listed on employer payrolls.

Postponing retirement planning isn't a wise idea, but it is common, says Jane Bryant Quinn, a bestselling author and columnist for AARP Bulletin.

Besides paying bills and putting children through school, "some people genuinely can't save because their incomes are low, which means they will depend on Social Security when they retire," she said.

"If you ask retirees what they would have done different, if they had a chance, they say 'save more money.' "

Ms. Quinn, author of "Making the Most of Your Money," said workers should look at their savings in terms of how much lifetime income it will produce when their working days are done.

"If you saved $100,000 and invested in a balanced stock and bond mutual fund, you can probably take $4,000 a year [4 percent] for 30 years," she said. "Add that to Social Security and a pension, if you have one, and that's your retirement income. If you saved $200,000, you can take $8,000 from the nest egg every year."

Even if someone starts saving for retirement at a late age, it is still possible to accumulate a sizable nest egg, although it will require more heavy lifting.

Rob Wilson, vice president of South Side-based Blazer Capital Management, said a worker age 50 starting at zero can still retire at age 65 with $1 million -- as long as he or she put away $3,100 a month with an annual appreciation rate of 7 percent each year.

"By waiting that long to get started, you put yourself behind the eight ball a little bit, but this is something that is achievable if you put your mind to it," he said, adding that someone in that situation may need to work an extra job, do freelance work or start a side business to accumulate the extra savings.

"At some point, folks wake up and realize they will need to retire at some point and they really need to do something radical or dramatic to get ready for it," Mr. Wilson said.

The federal government allows individuals who turn 50 by the end of a calendar year to make annual catch up contributions of up to $5,500 to their company retirement plans. Companies are not required to offer the catch-up contribution provision on their retirement plans, but the Plan Sponsor Council of America reports that about 98 percent of all 401(k) plans permit catch-up contributions.

Curt Knotick, a financial adviser and owner of Accurate Solutions Group in Butler, said there is no limit on non-qualified contributions to an annuity account and those contributions can add up in as little as 10 years.

"There are family costs during our working years that typically takes priority -- saving for college, paying the mortgage, marriages of children, taking care of parents," Mr. Knotick said. "Once we get through these times in our lives, before we know it, we are in our 50s and haven't saved for ourselves."

One of the biggest detriments to saving for retirement, he added, is delayed gratification. The idea of putting away $2,000 to $3,000 for the next 30 to 40 years before getting the reward is not likely to impress many 20- and 30-year-olds.

"The strategy of working through retirement [age] can work, if we have our health and our job is not physical in nature," he said. "Those are some big ifs to overcome, so I would not recommend it as a strategy."

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Tim Grant: tgrant@post-gazette.com or 412-263-1591.


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