ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, December 4, 1996 TAG: 9612040033
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
A NEW SURVEY shows a "huge gap between what people expect and what they will likely receive'' when they retire.
Working Americans have improved their savings for retirement, but not nearly enough to achieve the income they want.
The fifth annual Workplace Pulse survey found that the average annual American has saved $2,388 toward retirement this year, 11 percent more than in 1995 and 34 percent more than in 1994.
But the survey, released Tuesday, also revealed that income expectations have risen nearly 8 percent over the last year, to $26,256 a year from $24,372.
As a result, the retirement savings of workers in every age group will fall far below their average annual retirement income expectations, according to the poll organizers.
The survey of 1,000 full-time workers was conducted in early November by Marketing Research Institute for the Employers Council on Flexible Compensation and Colonial Life & Accident Insurance Co.
The poll showed that many of the workers realize they are not saving enough.
``Seventy-one percent say that they are not setting aside enough for retirement, compared to 60 percent in 1992,'' said Ken Feltman, executive director of the Employers Council.
``The sad reality is that they're correct; and for many, time is quickly running out.''
Workplace Pulse estimated workers who are 60 and plan to retire at 65 would need $353,324 in total savings, including Social Security, to receive the $26,256 income. A worker who is now 30 would need $1,145,972 at age 65 to meet expectations.
The report said 30-year-old workers would need to save $662 more each month than the average $1,761 a year they now put away to achieve an annual retirement income of $26,256 in 1996 dollars.
At the same time, a 60-year-old worker with $140,000 already saved would need to put away an additional $2,325 a month to retire at 65 on a $26,256 yearly income. But the survey found the average worker aged 45 to 64 is saving only $2,529 a year.
``That's a huge gap between what people expect and what they will likely receive,'' said John Penko, vice president of the insurance company.
``For younger workers, there may be time to catch up,'' he added. ``For older workers, it is going to be very hard, if not impossible, for them to live their retirement dreams, even though workers over 45 are saving 31 percent more than they were two years ago.''
The council is a nonprofit membership association formed in 1981 by several Fortune 500 companies to study and promote 401(k) and other elective retirement plans.
LENGTH: Medium: 59 linesby CNB