Much is made of a retirement crisis in America today, and the urgency is reiterated in a recent study by PNC. According to the latest PNC Perspectives of Retirement survey,
- more than half of retirees are concerned about outliving their money as they draw down savings,
- of those who have withdrawn funds, almost 60 percent do so to cover living expenses, and
- older retirees are more likely to withdraw from savings.
In Wilmington, there are approximately 14,400 people of traditional “retirement age” (65 and older), and 16.4 percent of them are employed. That compares to 14.5 percent employed of the roughly 1.25 million North Carolinians in that age group.
Working during traditional retirement age is likely attributable to the fear of not having enough money for retirement or a plan to manage money through retirement. And those using savings to cover living expenses versus having a structured retirement income strategy in place are putting themselves at greater risk of outliving their funds.
What’s important is that those planning for retirement start planning earlier. My colleagues in PNC Wealth Management offer advice on how pre-retirees can better plan in order to have more confidence in living the way the want to in retirement.
- Don't delay. It's never too late, and if you have a plan in place you will be in a much better position when your health or your employer puts you in an unexpected situation.
- Take the time. You don't have to spend hours planning for retirement. The key is to get started and at least annually review where you stand. When you have major life changes, including children, marriage, divorce or relocation, it is important to revisit your plans. It's less about time and more about engagement and awareness.
- Be resourceful. Think of every financial services organization you already have a relationship with: Your bank, your 401(k) provider, your insurance agent. Use those sources to investigate all of the financial planning resources that may be available to you.
- Save until it hurts. Increase contributions to a workplace retirement plan until the limit is reached, and maximize contributions to Individual Retirement Accounts (IRAs) and employer-sponsored defined contribution plans. Employer-sponsored plans, including 401(k)s, and Traditional IRAs, offer advantages including tax-deductible contributions and tax-deferred growth.
- Be penny wise. Pay off as much debt as possible and reduce spending to maximize retirement savings. Consider paying off your mortgage to eliminate that obligation, though remember there may be tax implications for doing so. However, don’t forget to put money aside for emergencies.
- Roll with it. Roll over 401(k)s from past employers into a single IRA or your current 401(k). This may reduce fees you pay and it’s just plain easier to have your money concentrated in fewer accounts.
- Know thyself. Also critically important is to know how much you will need to maintain your desired lifestyle in retirement. Consider future health care expenses and think about the timing when you will begin receiving Social Security payments, which could affect the amount you receive.
There are a number of retirement savings calculators available online to help you determine how much you will need to save. PNC helps consumers increase their retirement planning awareness through an interactive experience in the PNC Retirement Center on pnc.com/retirement
Chris George is senior vice president at PNC Bank and longtime Wilmington resident. He has served PNC and its predecessors for more than 20 years in various leadership roles. PNC Bank, N.A., a member of The PNC Financial Services Group, Inc., is one of the United States’ largest diversified financial services organizations, providing retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management.
These articles are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. PNC urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.