Experts Urge Americans to Save More for Retirement

If you think you’ve been hearing a lot lately about retirement saving, just wait a while.

Given the direction current economic, political and population trends are taking, the “retirement crisis” is likely to become a bigger issue in this country in the years ahead.

“Unless we as a society save more and do a better job of investing, future retirees face a drastically reduced standard of living,” says Eli Broad, chairman and chief executive of SunAmerica Inc., a Los Angeles financial services firm.

“This is a crisis facing us both individually and as a society. It affects everyone, since we could all be forced to pay higher taxes to cover the millions of Americans who failed to plan ahead.”

Similarly, Daniel Tully, chairman and chief executive of Merrill Lynch & Co., points to “the critical need for increased personal saving in the United States.”

Declares Tully in the Wall Street firm’s just-published annual report: “Our study reveals that the low U.S. savings rate could leave 46 million members of the baby-boom generation with retirement living standards lower than today’s retirees.”

Executives like these aren’t exactly impartial observers. They and their companies stand to make a lot of money from a surge in retirement saving.

Broad frankly describes the prospect as “one of the great growth industries of the future.” After having made his first fortune in the home-building business, he has in recent years realigned his business to concentrate entirely on selling retirement savings products such as annuities.

And SunAmerica’s stock has soared from $3.37 a share in 1990 to as high as $46.50 in late 1993.

So there is surely some element of salesperson’s zeal in all this. At the same time, however, the hype seems to be pretty well grounded in reality.

“People are living a lot longer, which means they have got to provide for a much longer retirement,” Broad said in an interview.

At the same time, as changes evolve in the nation’s Social Security and private pension systems, “retirement saving is becoming a do-it-yourself proposition,” he observed.

The subject can be daunting. Financial planners report they frequently see their customers’ faces go blank when they are confronted with it.

But these advisers point out that it isn’t a problem that has to be mastered all at once. The most important advice for many people, they say, is simply not to procrastinate.

“Stop believing that because your income and assets may be limited, you can’t do any financial planning,” says Jonathan Pond, a financial planner in Cambridge, Mass.

“Basic financial planning matters such as insurance, saving, planning for retirement and preparing estate planning documents apply to everyone, regardless of net worth.

“Much of what you do in your year-to-year financial planning is directly or indirectly geared toward assuring you a comfortable retirement,” Pond adds. “Yet many people still fall short.

“No matter how young or old you are, don’t delay projecting your retirement needs and planning to meet them. Take advantage of the many tax-deferred retirement-earmarked savings plans available” such as individual retirement accounts, company-sponsored 401(k) plans, or even U.S. savings bonds.

In Pond’s view, “it is inexcusable not to save at least 10% of your gross income, no matter what your circumstances. If you say you can’t do it, you haven’t looked hard enough at how you spend your money.

“Unless you inherit it or marry it, you will never accumulate enough money to achieve retirement security without saving regularly.”