Retirement facts

Paula Burkes, Business Writer

Published: October 3, 2008

How much to save

Save 13 percent of your income every year, starting at age 35; ideally earlier.

Longevity

From 1990 to 2020, the 55 and older population will grow 86 percent to nearly 100 million Americans.

The average age of death is 78; women outlive men by about five years. Of seniors 85 and older, 71 percent are women.

There’s a 50 percent chance that one spouse in every couple will be alive at 90. By 2050, more than 1 million Americans will be 100 years old or older.

Saving Rates

Estimates show at least two-thirds of Baby Boomers ages 55 to 64 lack the means to retire comfortably, or savings that would provide a lifetime income stream equal to at least 80 percent of their current income.

Since 2005, Americans have had a negative total savings rate, excluding home equity.

Boomers (born 1946 to 1964) average $150,000 worth, including home equity.

Half of workers have no employer-sponsored retirement accounts. Only 10 percent or so of those have pensions.

Among workers who have 401(k) retirement plans, the average balance is $57,000.

Only 11 percent of people put new money in individual retirement accounts. Most of the money in IRA accounts has been rolled from 401(k) s and other employer-sponsored plans.

Crisis for women

Nearly two-thirds of women earn less than $30,000 a year, and women’s earnings average 77 cents for every dollar earned by men -- a lifetime loss of more than $300,000.

The average Social Security benefit for women is $867 a month; $10,399 a year.

Thirty percent of women 75 to 79 are poor or near poor.

401(k) Trends

If they’re not automatically enrolled in 401(k) s, a quarter of eligible employees don’t make the effort to enroll.

One in four workers, ages 45 to 54, are withdrawing money from their 401(k)s and IRAs -- or borrowing against their 401(k)s and then leaving jobs before the accounts are vested, or fully theirs.

Of retirees with 401(k) s, only 20 percent opt for an annuity, an insurance product that functions as a personal pension plan. Ninety-eight percent take a lump-sum payout, which doesn’t insure a stream of income for life.

When they change jobs, workers who have balances of $20,000 or less typically take the money and spend it, versus roll it into an IRA or their next employer’s 401(k).

Healthcare

47 million Americans are uninsured.

Annual healthcare costs averaged $7,500 per individual in 2006. They‘re expected to rise to $9,525 by 2009.

Medicare covers only half of retiree medical costs.

Half of Medicare beneficiaries are 200 percent or more below poverty level.

Seventy percent of healthcare costs are due to diabetes, congestive heart failure, coronary heart disease, asthma and depression. One percent of people are responsible for 22 percent of healthcare costs.

Federal Deficits

Social Security, Medicare and Medicaid already account for 42 percent of outlays of the federal government, which as of 2005 has a deficit of $318 billion.

If the programs are left unchanged, payout to beneficiaries will exceed income from payroll taxes in 2018, and the government will face a $700 billion deficit.

Today, one of four tax dollars goes toward interest on money borrowed from China and other oil-producing countries.

Sources: Prudential Financial, Brookings Institution, AARP, Employee Benefit Research Institute, Women’s Institute for Secure Retirement, Kaiser Family Foundation.

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