White House conference: Affording a secure retirement

Decennial conference addresses some of the challenges

Published: July 13, 2015 06:30 PM

How can a home healthcare worker making $13,000 or less annually afford to save for retirement? That tough question was asked today to panelists at the White House Conference on Aging, where the discussion was about planning for financial security at any age. 

The answer wasn't very comforting. "It is really, really difficult," said Jean Chatzky, a personal-finance journalist serving as the AARP's financial ambassador. "You should, of course, be paid more money."

Chatzky went on to say, "In the interim, though, there are two essential ways to save. One way is just to save small, consistent chunks, $5 or $50. Every little bit helps. If and when you get a small windfall, a tax refund, or a birthday gift," she added, "try to put away as much as you can. We do what we can when we can do it, and hope we can make more money in the future."

Consumer Reports' Retirement Planning Guide offers unbiased, expert advice on planning for the next stage of your life. 

Income equality was among the many complex issues forming the backdrop of this once a decade meeting, and the question seemed to sum up the frustration of many Americans in planning for a secure retirement. Fifty years after the signing of laws enacting Medicare and Medicaid, and 80 years after the birth of Social Security, seniors are in better financial shape than many other age groups. But Americans also are operating in a financial and labor environment that's far less friendly to workers than it has been in decades. That can prove a challenge when saving for retirement.

Barriers to retirement security

U.S. Secretary of Labor Thomas E. Perez, the panel moderator, asked panelists to name the biggest barriers to retirement security. Vicky Elisa, president of Mothers' Voices of Georgia, a health advocacy organization, mentioned that individuals are living longer than in the past, which can make saving a huge challenge. "You never meet retirees who say they've saved enough or too much," she noted. 

Robin Diamonte, vice president of pensions investments at United Technologies Corp., noted that even individuals who have saved through their 401(k)s have to learn to resist withdrawing that money when they change jobs, and to invest appropriately for their risk and stage in life. And unlike past generations, which could depend on employers' pension experts to figure out how to provide an adequate income stream, individuals now have to do that job themselves. In some instances, aggressive marketing encourages them to leave 401(k)s at retirement when they could stay put, she added. "Once they're out, they can find themselves vulnerable" to investment advice that may not be in their best interest." 

"The biggest barrier is that we're human," Chatzky noted. "When we ask people to plan for retirement, we're asking them to do what's the antithesis of human behavior: saving, investing consistently, sticking with the markets when they're not a lot of fun. And once it's accumulated, not to pull it out and spend it all at once. ... We're climbing a mountain that previous generations didn't have to climb."

—Tobie Stanger (@TobieStanger on Twitter)

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