Retirement Planning: Watch Out for Yourself

William J. (Bill) Lynott |

CHICAGO — Despite the unrelenting flow of advice from people who ought to know, huge numbers of Americans just aren’t facing the truth about retirement. It would seem that those of us who are systematically planning and saving for a comfortable retirement are on the road to becoming a distinct minority.

Adding to the growing body of evidence of this national lethargy is data from the latest annual survey on retirement preparation conducted by Employee Benefit Research Institute (EBI), a non-profit organization. EBI has been gathering this data for 22 consecutive years. Among the findings of its 2011 survey:

  • Only 59% of Americans say they are currently saving for retirement, down from 65% in the 2009 survey
  • Of those workers who are saving, more than half report that they and/or their spouse have less than $25,000 in total savings and investments, excluding their home.
  • Less than half of workers have made any effort to calculate how much money they are likely to need in retirement.
  • Seventeen percent of workers say they are not at all confident about having enough money for a comfortable retirement.


One of the more obvious reasons is today’s difficult economy. Many workers feel that there is no money left for savings after paying all their bills. Some experts suggest that many baby boomers see their parents getting along well in retirement and they assume that they will be able to do the same.

In truth, today’s pre-retirees have a tougher job in preparing for retirement than their parents’ generation. The phasing out of defined benefit pension plans and today’s longer life spans are just two of the contributing factors that make it tougher to achieve a comfortable retirement. Certified Financial Planner Carl J. Kunhardt, Dallas, sums the situation up this way: “If you hope to enjoy a comfortable retirement, you’ll have to arrange for it yourself. No one else is going to worry about your financial health in retirement. If you don’t take care of it yourself, it won’t happen.”


If you want to take charge of your financial future, these important steps are essential:

Start Early — Whether your retirement is years away or just around the corner, you need to act now. The sooner you take the reins, the more likely you will meet your financial objectives. Obviously, starting early is a huge advantage, but regardless of your age, it is essential that you take action now.

Always Pay Yourself First — For most people, back-door savings just won’t work. That is, putting savings aside only after you have taken care of all other needs. That philosophy all but guarantees that there will never be anything left for you to save. So, always pay yourself first.

Decide on how much money you intend to save each month and put that money aside first. What is left is what is available for you to live on.

Let Uncle Sam Help — Except for a cash reserve to cover expenses in an emergency, contribute as much as you possibly can into a 401(k) or standard IRA every year. In addition to building blocks for your financial future, contributions to these tax-deferred savings vehicles are tax-deductible in the year in which you make them. (Contributions to a Roth IRA aren’t tax-deductible, but withdrawals after retirement are tax-free.)

If you participate in a 401(k) plan through an employer who offers a full or partial contribution based on your own, you should make every effort to contribute enough to get the maximum contribution offered by your employer. Employers’ contributions amount to “found money” that you cannot afford to pass up.

Beyond Retirement Accounts — If you are fortunate enough to have savings left over after making maximum contributions to your tax-deferred account, make sure that your portfolio is well diversified in order to minimize investment risks. Don’t neglect the stock market, but stick to mutual funds or exchange-traded funds (ETFs) for your investments in equities. Unless you are strongly motivated and in a position to dedicate huge amounts of time to studying and absorbing the mountains of data available, it’s best to leave that job up to the professionals.

Sensible diversification requires that you include cash equivalents such as bank CDs and money market funds in your overall investment portfolio. The recommended ratio of equity vs. cash equivalents will vary according to age. Younger investors with a longer timeline should devote a larger percentage of their investments to equities while older investors are advised to increase the amount of their cash-equivalent investments.

Taking your retirement future in your own hands is arguably more difficult now than it has been in modern times, but as Kunhardt points out, if you don’t do it, no one else will.

Information in this article is provided for educational and reference purposes only. It is not intended to provide specific advice or individual recommendations. Consult an accountant or tax adviser for advice regarding your particular situation.

About the author

William J. (Bill) Lynott

Freelance Writer

William J. (Bill) Lynott is a freelance writer whose work appears regularly in leading trade publications and newspapers, as well as consumer magazines including Reader’s Digest and Family Circle. You can reach Lynott at


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