Bridging the Retirement Savings Shortfall

bridging the retirement gapDespite the improving economy, Americans are growing increasingly concerned about their ability to afford to live comfortably in retirement.

According to the latest Retirement Confidence Survey (RCS) just released in February by the authoritative Employee Benefit Research Institute (EBRI), worker confidence in having enough money to live comfortably throughout retirement declined in 2013, resuming the slow downward trend in confidence that began in 2008.

Confidence in Retiring Comfortably is Declining

More specifically, 28 percent of workers now say they are not at all confident, an increase from 23 percent in 2012 (figure 1).

Screen Shot 2014-04-04 at 12.14.03 PMThough no worse than last year, more than one third of Americans are not looking forward to a pleasant retirement. Only 44 percent were somewhat confident that they would have enough money to live a comfortable retirement and 22 percent were not too confident. Some 14 percent were not at all confident.

Why?

Many who are financially ill-prepared at retirement need to continue to make investment income, but most don’t have a lot of confidence in their ability to reap investment income after they retire. In fact, few workers are optimistic about their post-retirement financial future. Just 30 percent of workers and 12 percent of retirees are very confident that their investments will grow in value.

Screen Shot 2014-04-04 at 12.14.18 PMGolden Years Investing

With the average life expectancy now over 78 years, millions Americans are living well past that age into their 80s and 90s. Retirement periods lasting 20 years or more afford time to augment savings and Social Security with additional investment income. For families that are short of the savings that will make them feel comfortable about retirement, investing in a single family rental home is answer. It is a safer, more secure option than higher risk, higher reward investments like futures or options. Real estate doesn’t fluctuate like stocks. Best of all, a single family rental generates cash every month in the form of rent. A retired couple in their golden years doesn’t have to wait until their sell their investment asset but gets income that they can spend as they need it.

With so much riding on the savings individuals can put aside for retirement, we can’t allow workers and retirees to become depressed about their investing prospects. The EBRI survey should sound an alarm to policymakers and employers that steps should be taken now to make it easier to bridge the retirement savings shortfall. Investing in options like single family rentals is an important alternative, especially as new investment companies like HomeUnion are making it easier for anyone to invest in real estate with the least possible risk.

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