Retirement News : Seniors : Saving for retirement: How does your future look?

Saving for retirement: How does your future look?

Date Added: 21-03-2005

When Janet Barnett hears that some big financial advisers predict people may need as much income for a comfortable retirement as they earned in their working years, she can only wonder.

"If that's the case, I'll never [be able to] retire," Barnett said, although she has every intention of doing so. The 63-year-old Penn Hills resident who owns a day care center already has cut her schedule to part time.

Carole Lampe, the North Hills financial planner who advises Barnett and her already retired husband, Ed, 67, tells her clients to gauge retirement needs by spending, not income. Lampe used to project retirees would need 80 percent of what they spent when they were working, but lately, she's estimating they will need more, mainly to keep up with rising health-care costs.

Many other industry projections of retirement needs are based on preretirement income, but they have one thing in common with Lampe's: They're going up.

Not so long ago, estimates of what people would need in retirement were as low as 65 percent of preretirement income. Some projections remain as low as 75 percent and studies of people who already have retired suggest they live on even less.

But increasingly, big investment and benefits analysts, such as Fidelity Investments and Watson Wyatt Worldwide, say rising health-care costs and the lifestyles of baby boomers argue they'll need substantially more.

For one thing, baby boomers may carry more debt into retirement than their frugal parents did. Some analysts also expect baby boomers will want to continue their pre-retirement consumption patterns, possibly traveling more frequently and eating out more often. They are also expected to live longer.

The revised projections from Fidelity, which this month said future retirees would need 80 percent to 100 percent of their pre-retirement income, and from Watson Wyatt, which pushed the figure to 105 percent a few years ago, come just as the generation born between 1946 and 1966 faces a host of financial challenges: college costs for children that have outpaced inflation; the continued decline of traditional pension plans that guarantee an income; 401(k) investments that are well short of where they should be; and the likelihood that Social Security benefits will face cuts.

Not all financial advisers and trend watchers are bearing such a worrisome message.

Some believe baby boomers may reinvent retirement to suit themselves, much as they did child-rearing.

Instead of stopping work cold at 65, they may happily dabble a day or more a week in their old careers -- or even new ones -- well into retirement.

And instead of hanging onto houses in cities where home values have soared, some may cash in and relocate to places where the living is easier and cheaper. After all, the thinking goes, baby boomers in their youth advocated simpler, less material lifestyles before taking on payments for plasma screen televisions and SUVs.

For More Information: http://www.post-gazette.com/pg/05079/473939.stm