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Boomers Find Something to Dread More than Death

It's not the fear of dying that keeps Baby Boomers up at night. In a recent survey of more than 3,000 Baby Boomers, 61 percent said they feared outliving their money in retirement more than they feared death. The fear of longevity risk was even more pronounced among 40-somethings:

Source: Allianz Life Insurance

So Whatcha Going to Do About It?
But so far that fear isn't showing up as a huge motivator to step up the retirement savings. Hewitt Associates says that the 401(k) contribution rate among employees hasn't budged much from 2007. I'm not buying the idea that even a steady savings rate is a triumph of sorts given the harsh economy. It's one thing if your family has been hit with a layoff, but if you're still employed and you're worrying about how you will make ends meet in retirement, what are you waiting for? Can't imagine coming up with the cash to save more right now? As T. Rowe Price financial planner Stuart Ritter points out, "it's not going to get any easier to save more later." Procrastination is not a viable retirement saving strategy.

And as I mentioned in a previous post, I think it's dangerous to build your retirement plan around the assumption that you will be able to delay your retirement into your late 60s or later. The reality is that most older Americans retire well before 65. Sure, that might change going forward, but just because there's a dawning realization by Boomers that they want to work longer doesn't necessarily mean that's how it will play out.

Saving more today is your surest bet to a more secure retirement. Besides, finding a way to funnel off more cash into retirement savings today will pay a double dividend. You're not only saving more for retirement, but it forces you live on less today. And the lower your living costs today, the less you need to replace in retirement.

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