Amid investment losses, a lousy job market, falling housing prices, and rising health-care costs, is it possible to build - or rebuild - retirement finances?
Yes, insist financial experts, and the sooner the better.
The economy has driven worker and retiree confidence of a comfortable retirement to record lows, according to the 2009 Retirement Confidence Survey from the Employee Benefits Research Institute, a Washington public-policy research organization.
Yet only 44 percent of workers or their spouse have even tried to calculate how much money they will need to save by the time they retire, the EBRI survey found. An equal number of workers simply guess.
"Estate planning is not just for the wealthy," said Peter Mullen, a financial consultant based in West Grove. "If we understand what we need to do, that knowledge will start working on us."
Keeping emotion out of making financial decisions is key. Some seek guidance from certified financial planners or financial advisers, who work for a fee or on commission. Others use online retirement-planning tools, such as those offered by AARP.org, MSNBC.com, or Yahoo.com.
For retirees seeking to regroup from the financial debacle, Chris Haidinger, director of financial planning at Janney Montgomery Scott L.L.C., of Philadelphia, prescribes a return to the basics: Evaluate what assets remain, determine annual income needs, and reconcile any shortfalls.
Retirees might have to spend less, find ways to generate more income, or some combination thereof. "That information is not necessarily what they want to hear, but it's reality," Haidinger said.
Kevin Nicholson, a co-owner of Walsh & Nicholson Financial Group in Wayne, said: "People are going to have to be willing to make those hard decisions that they keep trying to put off."
Make sure investment strategies address full life expectancy. "I have clients in their 80s living happily ever after" because they diversified their investments, said Richard J. Busillo of RTD Financial Advisors Inc., of Philadelphia. "Had they put all their money in CDs when they were 62, they might be in big trouble."
Near retirement - or not
In 2008, roughly one in three workers changed the age they expect to retire, and among those, the vast majority deferred retirement, the EBRI survey found. The poor economy and the need to make up losses in the stock market were most often cited for postponing retirement.
Deferring retirement has its benefits. Delaying payment of Social Security benefits can result in substantially higher payments for life. Deferring tapping into 401(k)s, IRAs, and other investment funds gives the accounts more time to recover and avoids liquidating shares when the markets are depressed.
Harry Shreckengast, 56, an executive vice president at MCS Management Services in Philadelphia, now says he expects to retire in 10 years, instead of the five he had planned on before the markets' collapse. His wife, Susan Fletcher, younger than her husband, is an independent career consultant with no plans to retire.
At the market's lowest point, the Media couple saw retirement investments and their two daughters' college funds plunge to nearly half their peak value. Consulting with Busillo, at RTD, the couple left investments untouched but curtailed family spending, diverting any savings into their 16-year-old daughter's college fund.
"It's just very, very disappointing that you could lose nearly half of your savings within a matter of four or five months," Shreckengast said. But the family has come to grips with it. "We realize we're lucky we have what we have."
If you have not determined how your financial-retirement need compares with your current assets earmarked for retirement, "This is a perfect time to assess your situation," said Jean Setzfand, AARP's national director of financial security. And do not forget to include health-care costs in the equation.
Know what your target monthly savings contributions should be to meet your retirement-fund goals, Mullen said. Keep paying into retirement plans to capitalize on the "great buying opportunity" offered by low share prices, Busillo said.
Live within your means and scale back major purchases, such as a car or home, to increase long-term financial stability, experts said. Make it a goal to go into retirement with no debt, mortgage or otherwise, AARP's Setzfand urged.
Current low interest rates make this a prime time to reduce debt service by refinancing mortgages or home-equity loans, Busillo said.
Financial advisers recommend that young adults, like older ones, pay off credit card debt and then build up an emergency fund of three to six months' worth of expenses. After that, retirement should be a primary focus.
During his six years working as a cheese monger at DiBruno Bros. House of Cheese on Ninth Street in the Italian Market, Ezekiel Ferguson upgraded his lifestyle from four-for-a-dollar soft pretzels for supper and breakfast to a regular "steak night" when the 28-year-old Bella Vista resident and his friends cook finer cuts of meat for dinner.
Although he has not thought much about retirement, Ferguson plans to ask about setting up a 401(k). "I should start saving now," he said. "It will at least be something I can grab if needed."
"I don't want to work until I'm 70," he said. "I want to get a few of those golden years of leisure."
Early career is also the time for adult children to talk to parents about their expectations and wishes for retirement. "Discuss what the options are so you can help them make better decisions," Janney's Haidinger said.
And do not be afraid of those retirement-planning conversations, Mullen said. "It's going to be a strengthening thing."