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Finding stories in the looming retirement-savings crisis

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The theme of long-term security has been running through many financial headlines lately, from the macro affairs of government economic policy to the level of households potentially affected by Social Security cost-of-living changes, the loss of unemployment benefits and uncertainty over the future of health insurance premiums. 

So as you ponder first-quarter workplace or personal finance stories, why not take a look at the retirement-savings situation in your region, from employer-sponsored investment offerings to how average savings in your state stack up against the rest of the nation?

One current topic your audience may be wondering about involves Roth 401(k) conversions; as this CNN Money report explains, a provision of December’s “fiscal cliff” deal will allow people under age 59 1/2 to convert their traditional 401(k) savings to Roth 401(k) savings.   While regular 401(k) monies are socked away before being taxed — taxes are levied when the accounts are tapped, at whatever the saver’s tax rate is then.  Contributions to Roth 401(k)s are made with taxable dollars — like their IRA counterparts — but the money withdrawn later in life will be tax-free.  To convert or not to convert may be a question on some readers’ minds. It all depends on current tax rate vs. expected tax rate in retirement, and other factors that a certified financial planner can discuss.  Oh and the reason for the new leniency:  Allowing people to change tax-free dollars to taxable dollars now will generate some much-needed income for federal government coffers.  

While you’re at it, you might take a look at the retirement accounts offered by some of your area’s major employers.  Do they even offer Roth 401(k)s, which are a recent addition to tax law.  According to the non-profit Plan Sponsor Council of America (which represents employers that offer retirement savings plans) 49 percent do.  The council’s recent 55th annual survey is a trove of other data about retirement plans, including stats on enrollment, plan offerings, company matches and participation rates.

Another neat source of data on retirement savings comes from the ING Retirement Savings Institute.  The bank offers a variety of recently updated (Sept. 2012)  online tools derived from its research, including an interactive United States map that shows average “savings progress” toward retirement needs, and amount saved as a function of annual income — and ranks states by that figure.  Other tools include Savings Fast Facts, and an interesting white paper about how “peer comparison” motivates consumers to save for retirement.

Talk with financial advisers about some of the worst-case scenarios they are seeing, and with economists/public policy experts about possible solutions to what appears a severe undersavings problem.  You might solicit readers for a retirement checkup provided pro-bono by a certified financial planner or other reputable professional.  One issue that seems to crop up a lot is that of parents bailing out adult children; planners can offer perspective on the long-term pros and cons of  helping family members.  Creative solutions to retirement — multi-generational households, downsizing to small homes or travel trailers, or finding roommates in retirement — also will be of interest to readers seeking ideas.

Other good sources of retirement savings data include the Employee Benefit Research Institute, which conducts an annual survey, and WISER (Women’s Institute for a Secure Retirement) which is out with a November 2012 report about the impact of running out of money in retirement.  It includes some sobering statistics and you might want to talk with area advocates for senior citizens, such as councils on aging, AARP chapters and public social workers, about the coping methods they’re seeing.

And in case you missed it, here’s a New York Times piece about unemployed Baby Boomers reinventing themselves despite depleted savings and unemployment; while not a retirement article per se, the article roused some vehement reader comments about the plight of older Americans with little savings and might also provide some basis for fresh story angles.

 

About the Author

Veteran financial writer Melissa Preddy served as a business writer, editor and columnist for The Detroit News from 1995 to 2008, is a Michigan-based freelance journalist. She now works as a writer and editor for a medical research unit of the University of Michigan Medical School. Follow her daily posts. | E-mail: Melissa Preddy

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