Survey after survey shows that many workers aren't saving enough for retirement. That's a problem even if your retirement target is decades away, but it may be a much bigger worry for the aging generation that made its mark with sex, drugs, and rock n' roll.
A survey of employers by the Center for Retirement Research at Boston College found that many companies have enough evidence to believe that a large portion of their baby boomer workforce is unprepared for retirement. In fact, employers believe half of their baby boomer employees, those born in the wave between 1946 and 1964, lack enough money to retire at the traditional age.
As a result, employers expect about 60% of the employees not yet prepared for retirement to stick around at work at least an extra two years.
Whether the results of this survey prove true, the researchers said, depends on whether boomers think they have enough money stashed away to retire. That, in turn, will depend on market performance and a million individual decisions about asset allocation, risk tolerance, and how fast retirees plan to draw on their savings.
It also depends on the size of boomers' future contributions to their retirement nest eggs. Most baby boomers may look in the mirror, see their youthful faces staring back, and marvel at the fact that they're probably in their 50s.
Retirement is near for this massive generation, but it's not quite looming on tomorrow's horizon. There's still time for many baby boomers to become better-prepared for retirement.
An unstable seat
Boomers probably already know this, but the few who still hold out hope will have to recognize that the traditional "three-legged stool" of retirement income could be a little wobbly by the time they're ready to quit work for good.
Social Security, as noted by the retirement center's survey, will require that baby boomers retire at age 66 or 67 to get their full benefits. That's one retirement delay built right into the classic support system. The generation's sheer size will also strain the Social Security system, so there may be changes ahead.
Traditional pensions have been increasingly revoked or reconfigured, so they're not the security blanket they used to be. They've been replaced with systems that put the onus on workers themselves to create their own retirement treasure chest.
The good news is that with some years left before retirement, and maybe an extra year or two of work, baby boomers can strengthen their personal savings to bolster the two other legs of their retirement stool.
That means taking advantage of all the savings vehicles out there that make sense for your situation. If you can save at work through a 401(k) plan, consider increasing your contributions over the coming years. You'll be able to bank on it in retirement. Fill up an IRA, if that makes more sense. There are multiple ways you can use tax laws in your favor to quickly build a retirement stash, and you can find a lot more information about your options in the Fool's IRA and 401(k) Centers. Also, consider taking a free trial to our Rule Your Retirement newsletter service while you're looking around. Our advisor Robert Brokamp has lots of advice and information for those planning for retirement, as well as current retirees.
Get paid to retire
An extra year or two at work means more time spent filling those savings accounts and less time spent drawing on them. That can be good for retirement savings in both the short-term and the long-run. Nonetheless, consider where to put your money. Even if you're nearing retirement and your investments have become more conservative, you might want to keep a portion invested in stocks to promote growth throughout your leisure years.
Why not consider stocks that pay you to invest? Robert Brokamp, the aforementioned resident Foolish expert on all things retirement, recommends considering dividend-paying stocks as a great way to build a big pile of cash. For example, Bank of America
There's more to retirement than I can write here. The important thing is to start now. The more time you give yourself and your investments, the bigger your retirement fund will be when it's time to accept that even ever-youthful boomers reach retirement age.
Bank of America and Unilever are Motley Fool Income Investor recommendations.
Fool contributor Mary Dalrymple does not own stock in any company mentioned in this article, and she welcomes your feedback.