Americans have traditionally saved for retirement through their employers, whether it was via traditional defined benefit pensions or todays more common 401(k) retirement accounts. But how is Americas employer-based retirement savings system faring? Some have grave doubts, but the data show clearly that, via employer-sponsored retirement plans, more Americans are saving more for retirement than ever before.

My friend and fellow Forbes contributor Teresa Ghilarducci, a professor of economics at the New School for Social Research in New York City, argues in a recent Forbes article that this relationship was always miscast. Prof. Ghilarducci writes that Retirement plan coverage situation has been falling for 20 years, even before the COVID 19 recession. Even when the economy was doing well at the end of 2019; only 36% of workers age 25-64 had a retirement plan at work (a fall in coverage rates from 41% in 2015.

Ghilarducci seemingly has the data to back up her claims: figures from the federal governments Current Population Survey indeed indicate that declining shares of U.S. workers are saving for retirement at work. According to CPS data, the share of U.S. workers participating in a retirement plan has dropped by nearly one-third since 1999.

But heres something that ordinary readers wouldnt consider but which retirement policy analysts are familiar with: the Current Population Survey data Prof. Ghilarducci relies on are almost certainly wrong. More reliable data sources tell a very different story on Americans retirement savings.

There are three basic ways to figure out how many Americans participate in a workplace retirement plan. We can simply ask people, as the Current Population Survey does. Or we can ask employers whether they offer their employees a retirement plan. The Bureau of Labor Statistics National Compensation Survey does that. Or, we can use tax data which indicate whether a given taxpayer participates in a retirement plan. The IRSs Statistics of Income data take this approach.

In theory, all these approaches should yield the same answer. But they dont. A 2011 Social Security Administration study compared how Americans answered a survey question asking about retirement plan participation versus what their tax returns showed. The SSA researchers concluded that the participation rate in [defined contribution] plans is about 11 percentage-points higher when using W-2 tax records rather than survey reports. The best explanation is simply that, when asked, people sometimes get the answer wrong.

And we dont need to look far for proof. Consider full-time state and local government employees, where the BLSs National Compensation Survey finds 99 percent retirement plan coverage and 90 percent participation. (Or, if you dont believe the NCS survey, see if you can find a state or local government that doesnt offer full-time employees a retirement plan.)

But only 71 percent of full-time state and local government employees tell the CPS theyre offered a retirement plan at work. And only 64 percent said they actually participate. The same holds for federal employees, 100 percent of whom are automatically enrolled in both a defined benefit and a defined contribution retirement plan. But only 63 percent of full-time federal workers tell the CPS theyre participating in a retirement plan. The Current Population Survey data simply arent credible on this front.

Retirement coverage and participation among full-time state and local government employees, 2019.

On top of these basic reporting errors, in 2014 the federal government redesigned the CPSs retirement plan questions. That survey redesign reduced reported retirement plan participation by about six percentage points in a single year, and since then the CPSs participation rate has fallen even further. The Employee Benefit Research Institute has repeatedly drawn attention to this issue, warning that relying on [the CPS] to understand trends in [retirement plan] coverage is dangerous and misleading at best.

So what do these other data sources show regarding retirement plan participation in the U.S.? Pretty much the opposite of what Prof. Ghilarducci claims. The chart below denotes Ghilarduccis Current Population Survey-based figures in blue, showing, as she notes, a decline in retirement plan participation among workers aged 25 to 64. The rapid decline beginning in 2014, which no one has explained other than by reference to the CPS survey redesign, is evident.

Percent of employees participating in employer-sponsored retirement plan.

The orange line running from 1999 through 2019 shows the employer-based National Compensation Surveys figures for all private sector employees (not, as in Ghilarduccis CPS-based figures, both public and private sector workers aged 25 to 64). The NCS data show a distinctly different pattern from Ghilarduccis figures: rather than a decline in participation from 2014 onward, retirement plan participation actually increases to the highest level on record!

The yellow line beginning in 2010 is NCS data on both public and private sector workers. Even in 2010 the NCS shows a participation rate of 55 percent, eight percentage points higher than Ghilarduccis figures. By 2019 the NCS data again shows record high retirement plan participation, with the NCSs 56 percent participation rate a full 20 percentage points higher than the CPS figures that Ghilarducci touts.

And then theres IRS data, shown in grey, which cover all taxpayers with wage income aged 25 to 64. The IRS data show that in 2017, 58 percent of workers aged 25 to 64 participated in a retirement plan, versus Ghilarduccis claimed rate of only 38 percent.

Even the CPS itself now contradicts Prof. Ghilarduccis argument: the CPS also asks individuals whether they received any income from a retirement account, such as interest on savings. As EBRIs Craig Copeland put it, if workers earned income in a retirement account, it is safe to assume that they had a retirement account, meaning they were participating in a retirement plan. By this approach, Copeland finds that 62 percent of full-time employees in 2018 participated in a retirement plan, a massive increase compared to the levels Ghilarducci reports.

Moreover, the 401(k) contribution limits are high enough that most married couples could save adequately even if only one spouse had access to a workplace plan. IRS data show that in 2017, 81.4 percent of two-earner households had at least one spouse contributing to a workplace retirement plan. If we assume that 90 percent of married couples with access to a plan had one or both spouses participate, this implies that 91 percent of married couples were offered at retirement plan at work. This isnt a massive coverage problem.

None of this is a trade secret. Researchers are well aware of how the CPSs figure are inconsistent with other data sources. Why would a researcher ignore what seems to be better data pointing to better outcomes?

Im not a mind-reader, but a comment in Prof. Ghilarduccis article may provide insights: We should have never expected dynamic, mostly nonunion, American employers to be reliable sponsors of what workers need. Regardless of whether this perspective is correct overall, in a specific case it can lead a person to believe data that supports their prior views and reject data that contradict it.

With open minds we can see a very different retirement landscape. Even as labor unions and traditional defined benefit pensions have declined, Americans are saving more than ever for retirement. Department of Labor data shows that contributions to private sector retirement plans rose from 5.8 percent of employee wages in 1975 when traditional pensions, usually in unionized industries, were at their peak to 9.6 percent of wages in 2017, a two-thirds increase in the amounts Americans are saving for retirement. Retirement savings rose both because 401(k)s are more widespread than traditional pensions ever were and because 401(k)s have two contributors both employer and employee while only employers contributed to defined benefit pensions.

Employer and Employee Contributions to Private Sector Retirement Plans, as Percent of Private ... [+] Industry Wages and Salaries.

Prof. Ghilarducci laments that employers arent contributing enough to their employees retirements: If every worker had an employer that contributed 3% of their salary in a retirement plan at work it would cost employers $192 billion a year. Right now employers spend only $73 billion per year for retirement contributions. In fact, data from the National Income and Product Account figures show that in 2019 private sector employers contributed $291 billion to retirement plans, equal to 3.1 percent of private sector wages and salaries.

The data are clear: Americans are saving more than ever before for retirement, and it came not from government edicts or labor union pressures, but by making retirement plans more readily available, less burdensome on employers and funded by both employers and employees. Americas private sector retirement system has never been stronger than it is today. We should be willing to follow the facts rather than our preconceptions.

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Follow The Facts: Employer-Based Retirement Savings Are Stronger Than Ever - Forbes

Michael B. Sauter, 24/7 Wall Street Published 7:00 a.m. ET Aug. 17, 2020

Its a great time to check up on your retirement plan. This is how you do it. Buzz60

One of the reasons that many Americans get up and go to work every day is to put some money away for retirement. While Social Security payments can be a helpful financial foundation in retirement, it is often not enough to cover anything but the most basic expenditures, especially in the uncertain financial times wrought by the coronavirus pandemic.

Based on average annual spending for American seniors and the national average life expectancy at age 65 of 19.4 years, the average American will spend about $987,000 from retirement age on. And those hoping for a more comfortable and financially secure retirement should plan on saving a little more.

Of course, both cost of living and life expectancy vary considerably by state and so, too, does the cost of retirement. Using the average annual spending of Americans 65 and older adjusted at the state level for cost of living and life expectancy 24/7 Wall St. calculated what it will cost to retire comfortably in each state. All data used in the ranking came from the Bureau of Economic Analysis, the Bureau of Labor Statistics, and the Institute for Health Metrics and Evaluation, an independent global health research center at the University of Washington.

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One of the best ways to prepare financially is through retirement-specific accounts, such as IRAs or 401(k)s. These types of funds offer special tax benefits and often come with employer matches. Those who fail to save enough and take advantage of options like these or draw from them before they hit retirement age may have to work past age 65 in order to pay the bills. Here is what you can do if COVID-19 is threatening your retirement.

Just how much one needs to save to comfortably meet expected spending from age 65 on depends on a number of factors. Many who work in the public sector, for example, may benefit in retirement from regular pension payments, in addition to Social Security. The amount of these pension payments vary by state and employer. Even in some of the most expensive places to retire, state subsidies can help finance the cost of retirement. These are the states spending the most to fund their residents' retirement.

Alabama.(Photo: Sean Pavone / Getty Images)

1. Alabama

Est. total retirement spending: $894,461 (3rd least)

Avg. cost of living: 13.6% less than avg. (3rd lowest)

Avg. monthly homeownership cost for senior citizens: $357 (6th lowest)

Pop. 65 and older: 17.0% (18th highest)

In Alabama, residents need an average of about $894,000 to live out their retirement years in relative comfort below the national average of about $1.1 million. Retirees in Alabama need less retirement savings because of both lower average life expectancy and lower cost of living.

Life expectancy at age 65 in the state is 17.7 years, nearly two years below the national average. Additionally, goods and services are about 14% less expensive on average in Alabama than they are nationwide.

2. Alaska

Est. total retirement spending: $1,170,763 (13th most)

Avg. cost of living: +4.8% more than avg. (10th highest)

Avg. monthly homeownership cost for senior citizens: $504 (19th highest)

Pop. 65 and older: 11.9% (2nd lowest)

Retirees need to save an estimated average of nearly $1.2 million to live out their years in comfort in Alaska. The estimated need for retirement savings in the state is higher than in most states due in large part to the high cost of living in the state. Goods and services are 4.8% more expensive across Alaska on average than they are nationwide. Even without a mortgage, home ownership costs an average of $504 a month among the retirement age population, more than in all but a handful of states.

3. Arizona

Est. total retirement spending: $1,134,482 (18th most)

Avg. cost of living: 3.5% less than avg. (25th highest)

Avg. monthly homeownership cost for senior citizens: $410 (15th lowest)

Pop. 65 and older: 17.6% (11th highest)

With a warm climate and a relatively low cost of living, Arizona is an ideal state for many Americans to retire. Of the state's population, 17.6% of residents are 65 or older, compared to 16.0% of the total U.S. population.

The estimated average savings necessary for a comfortable retirement in Arizona is $1.1 million, more than in most states. This is due in large part to the high life expectancy in the state. Those who are 65 years old in Arizona are expected to live an additional 20 years on average, almost a year longer than the national average.

4. Arkansas

Est. total retirement spending: $893,051 (2nd least)

Avg. cost of living: 14.7% less than avg. (the lowest)

Avg. monthly homeownership cost for senior citizens: $355 (4th lowest)

Pop. 65 and older: 16.8% (22nd highest)

Arkansas is one of only 13 states where residents can retire and live comfortably while spending less than $1 million. This is due to the state's low cost of living and low life expectancy. Goods and services in Arkansas are 14.7% less expensive than they are nationwide, on average, and those who are 65 can expect to live to 82.9, on average, below the 84.4 year national average life expectancy at 65.

5. California

Est. total retirement spending: $1,397,174 (3rd most)

Avg. cost of living: +15.4% more than avg. (3rd highest)

Avg. monthly homeownership cost for senior citizens: $567 (11th highest)

Pop. 65 and older: 14.3% (6th lowest)

California has one of the highest costs of living of any state in the country as well as one of the highest life expectancies. Goods and services are 15.4% more expensive in California on average than they are nationwide, and average life expectancy at age 65 in the state is 85.7 years, nearly a year and a half longer than national average.

As a result, for a comfortable retirement in the state, residents would need an average of about $1.4 million in savings, more than in every other state apart from Hawaii and New York.

6. Colorado

Est. total retirement spending: $1,192,006 (11th most)

Avg. cost of living: +1.9% more than avg. (13th highest)

Avg. monthly homeownership cost for senior citizens: $459 (23rd lowest)

Pop. 65 and older: 14.2% (5th lowest)

The average Colorado retiree would need about $1.2 million in savings to live comfortably, which is higher than in 39 states. The relatively high cost of living in the state may help explain why so many Colorado senior citizens continue to work after the traditional retirement age. Among the state's senior households, 41.5% have wage earnings, compared to the national share of 38.0% of senior households.

7. Connecticut

Est. total retirement spending: $1,265,959 (6th most)

Avg. cost of living: +6.1% more than avg. (8th highest)

Avg. monthly homeownership cost for senior citizens: $870 (2nd highest)

Pop. 65 and older: 17.2% (15th highest)

Housing costs are high for senior citizens living in Connecticut. The average monthly cost of homeownership among the 65 and older population is $870 without a mortgage and $1,481 with the second and 13th highest costs, respectively, among states.

Partially as a result, retirement is more expensive in Connecticut than in most other states. Living comfortably for the 20.4 years Connecticut residents live, on average, after age 65, costs an estimated $1.3 million average, more than in all but five other states.

8. Delaware

Est. total retirement spending: $1,121,070 (19th most)

Avg. cost of living: 1.2% less than avg. (18th highest)

Avg. monthly homeownership cost for senior citizens: $451 (20th lowest)

Pop. 65 and older: 18.7% (6th highest)

For those who reach age 65 in Delaware, the average life expectancy is 84.4 years. Living out those years in relative comfort will cost an estimated $1.1 million on average roughly in line with the national average cost of retirement.

9. Florida

Est. total retirement spending: $1,194,451 (9th most)

Avg. cost of living: +0.6% more than avg. (15th highest)

Avg. monthly homeownership cost for senior citizens: $494 (21st highest)

Pop. 65 and older: 20.5% (2nd highest)

Florida's warm climate makes it an ideal location for many Americans to retire. In fact, more than one in every five residents of the Sunshine State are 65 or older, the second largest share of any state in the country. Residents who are 65 in the state are expected to live to an average of just over 85, about a year longer than the national average.

Due in part to the higher life expectancy, the estimated retirement costs in Florida are $1,194,451, greater than the $1,134,687 national average.

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Georgia.(Photo: SeanPavonePhoto / Getty Images)

10. Georgia

Est. total retirement spending: $1,006,303 (15th least)

Avg. cost of living: 7.0% less than avg. (24th lowest)

Avg. monthly homeownership cost for senior citizens: $400 (12th lowest)

Pop. 65 and older: 13.8% (4th lowest)

The average life expectancy for Georgia residents at age 65 is 83.5 years, about a year shy of the national average. Additionally, goods and services are 7.0% less expensive in Georgia than they are nationwide. As a result, the average estimated cost of a comfortable retirement in the state is just over $1 million slightly below the $1.1 million average nationwide.

11. Hawaii

Est. total retirement spending: $1,485,123 (the most)

Avg. cost of living: +18.1% more than avg. (the highest)

Avg. monthly homeownership cost for senior citizens: $518 (16th highest)

Pop. 65 and older: 18.4% (7th highest)

While Hawaii's warm climate may make it an ideal state for many Americans to retire in, it is also the most expensive state in the country in which to retire. Goods and services in Hawaii are 18.1% more expensive than they are nationwide, on average. Life expectancy at 65 is also longer than average in Hawaii. As a result, retirees in the state can expect to need about $1.5 million to live out their golden years in comfort, well above the $1.1 million national average.

12. Idaho

Est. total retirement spending: $1,049,585 (23rd least)

Avg. cost of living: 7.5% less than avg. (22nd lowest)

Avg. monthly homeownership cost for senior citizens: $364 (7th lowest)

Pop. 65 and older: 15.9% (20th lowest)

Those who retire in Idaho can expect to spend less to live comfortably than those who retire in most other states. Due in part to Idaho's lower than average cost of living particularly the state's low housing costs retirees will spend an estimated average of $1,049,585 to live comfortably. That is about $85,000 less than the national average, even though life expectancy at age 65 in Idaho is the same as it is nationwide.

13. Illinois

Est. total retirement spending: $1,118,865 (20th most)

Avg. cost of living: 1.9% less than avg. (19th highest)

Avg. monthly homeownership cost for senior citizens: $609 (9th highest)

Pop. 65 and older: 15.6% (12th lowest)

Retiring comfortably in Illinois today would require an estimated $1.1 million, in line with the national average. Though the overall cost of living across the state is less than average, housing costs are relatively high. The average monthly cost of homeownership for state residents of retirement age is $609 without a mortgage and $1,458 with a mortgage, ninth highest and 14th highest among states, respectively.

14. Indiana

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Retirement living: Here's what it costs to retire comfortably in every state - USA TODAY

Although millions of Americans have been severely impacted by the coronavirus pandemic, the vast majority of retirement savers have refrained from dipping into their 401(k)s to cover their expenses.

During the first half of 2020, 2.8% of retirement savers made withdrawals from their defined contribution retirement plans, the most popular of which are 401(k)s and 403(b)s, according to recent data from the Investment Company Institute. This does not include individual retirement accounts and the percentage of savers making withdrawals is separate from those taking out 401(k) loans.ICI's data is based on information straight from plan providers and covers more than 30 million DC plan accounts, which is generally a type of tax-advantaged retirement account where typically both savers and employers contribute.

The level of withdrawals during the first half of the year is up only slightly from the 2.5% of retirement savers who took money out of their 401(k)s during the same period last year. About 2.2% of savers took a withdrawal during the first half of 2018, according to ICI.

Of the money withdrawn this year, about 1.1% of savers took the money as a hardship withdrawal, ICI reports. Those seeking this type of withdrawal must demonstrate financial hardship, such as the potential for eviction from your home or overwhelming medical debt, and generally many plan providers will still impose a 10% penalty on the funds taken out.

It's worth noting that the number of accounts taking withdrawals reported by ICI is far less than the roughly 14% of survey respondents with retirement savings who said in May that they had taken money from accounts such as 401(k)s and individual retirement accounts. That survey data was based on a much smaller pool of retirement savers and included all of types of retirement accounts, whereas ICI's data focused only on defined contribution plans such as 401(k)s and had a much larger data set.

Separate from withdrawals, ICI found that 2.9% of participants took the newly created coronavirus-related distribution during the first half of the year. In response to the sudden economic downturn, Congress passed provisions in the CARES Act that allow Americans to take a withdrawal of up to $100,000 from their retirement savings, including 401(k)s or individual retirement accounts, without the typical 10% early withdrawal penalty.

Referred to as "coronavirus-related distributions," they are available only in 2020 and can be repaid within three years to avoid any income taxes on the funds taken. When plan providers identify these new CRD options (some do not), they categorize them separately from straight withdrawals, says Sarah Holden, ICI senior director of retirement and investor research.

When it comes to 401(k) loans, 15.6% of plan providers reported they had outstanding loans at the end of June, according to ICI, which tracks loan data quarterly. That was down slightly from the 16.3% of plan providers who had outstanding loans at the end of March and the 16.1% reported at the end of 2019.

The introduction of the pentalty free conronavirus-related distributions may be contributing to the lower 401(k) loan activity, ICI reports. "Because policymakers have made these [CRD] withdrawals repayable, they've kind of made them a bit more like a loan," Holden says. Instead of taking out a loan, some savers may be opting for the new CRD option instead.

"We see a slight increase in withdrawal activity following the onset of economic volatility and hardship, but the increase is much smaller than you might expect, given the severity of the Covid-19 economic downturn," says Holden.

The low loan activity may also be due to Americans not hitting the point yet where they need to tap their retirement accounts. "We do see that more people have [401(k)] loans in the wake of financially stressful times, but not immediately," Holden says. Historically, people usually drain other accounts, such as emergency savings, before dipping into their retirement funds, she says.

In fact, many Americans have not even had to halt their savings levels amid the pandemic. Only 2% of plan participants stopped contributing to their plans in the first half of 2020, ICI's data shows. That's higher than the 1.3% of savers who stopped putting money away during the first half of 2019, but less than the 4.6% who ceased to contribute in the first half of 2009, during the Great Recession.

"These data reflect the long-term mindset of retirement savers," Holden says. "These assets represent a pot of money that savers have earmarked for retirement and they have consistently demonstrated that they generally stay the course to reach that financial goal, even during challenging economic situations."

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Only 2.8% of retirement savers made a withdrawal from their 401(k) so far this year - CNBC

Morgan Stanley private wealth adviser Mary Deatherage joins Barron's Roundtable to discuss what retirement savings options will help generate income in a low-yield environment.

Saving for retirement is a monumental task, requiring several decades of diligent effort. Some people hope to circumvent that by playing the lottery or trying to bet on the right investments, but these get-rich-quick schemes rarely pan out. That doesn't mean there aren't secrets to growing your wealth, though.

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Below, I outline three tricks to help reach retirement faster and hold on to more cash. To be clear, these "secrets" still require effort on your part, but they can help make the task a little less arduous.

The only good reasons to put off saving for retirement are if you need all your income to cover your living expenses or if you're using your extra cash to pay down high-interest debt or build anemergency fund. Once those are out of the way, retirement should be your top priority. Why? Because every month you delay, you're costing yourself money.

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Consider this: Your goal is to save $1.5 million for retirement and you hope to retire at 65. If you began saving once you turned 25, you'd only need to save about $627 per month, assuming a 7% annual rate of return. But if you waited just six months to start saving, you'd now have to set aside $674 per month, assuming the same annual rate of return, to hit your goal. That's an extra $47 per month.

Over the course of your working life, you'd end up contributing about $300,960 of your own money if you began saving at 25. But if you waited until 25 1/2, you'd have to contribute $319,476 of your own funds, all because you decided to put off saving for retirement for six months. And you could cost yourself a lot more than $19,000 if you waited even longer.

You might not be able to afford to make large contributions, especially right now, but even small contributions can grow into significant amounts over time. Set aside what you can for retirement each month, even if it's only a few dollars. This will get you into the habit, and then as you're able to free up more cash for retirement, you can increase your contributions.

Retirement accounts are treated differently, depending on whether they're tax-deferred or Roth accounts. Tax-deferred contributions, including contributions to most401(k)s, reduce your taxable income this year, but then you owe taxes on your distributions in retirement. This is the smarter way to go if you think you're in a higher tax bracket today than you will be once you retire. By delaying taxes until you're in a lower tax bracket, you'll owe a smaller percentage of your savings to the government.

RETIREMENT OPTIMISM HAS HIT A 7-YEAR LOW, SURVEY SAYS

Roth accounts work the opposite way. You pay taxes on your initial contributions, but then you don't owe taxes on your distributions in retirement. These accounts make more sense if you believe you're in the same or a lower tax bracket today than you will be once you retire. By paying taxes now, you'll lose a smaller percentage on a smaller amount of money, and then you'll get to avoid taxes on earnings.

The tricky thing about all this is that there's no way to predict how your income or the tax brackets might change between now and your retirement. All you can do is make an educated guess. Some people choose to hedge their bets by having some of each type of savings. If you do this, favor one or the other based on which you think will offer you the best tax benefits.

Most people don't think ofhealth savings accounts (HSAs)as retirement savings vehicles, but they're actually one of the best. Money you contribute to an HSA reduces your taxable income for the year, like contributions to tax-deferred retirement accounts, and if you use the money for medical expenses at any age, you won't owe taxes on it at all. Once you reach 65, you can use the money for nonmedical expenses, too, but you'll owe income tax if you do this. You can actually withdraw money for nonmedical expenses before 65, but you'll pay a 20% penalty.

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HSAs are not subject torequired minimum distributions (RMDs)like tax-deferred retirement savings andRoth 401(k)sare, so it's also a smart spot to park your cash if you want to be able to withdraw the money at your own pace. RMDs can force some retirees to withdraw more money from their retirement accounts than they want to, and this can raise their tax bill. You won't have to worry about this quite as much if you stash some of your savings in an HSA.

Not everyone can contribute to one, though. You must have a high-deductible health insurance plan, which is defined as one with a deductible of at least $1,400 for an individual in 2020 and $2,800 for a family. Individuals may contribute up to $3,550 to an HSA in 2020 and families may contribute up to $7,100.

No matter your age or retirement goals, you will have to save a lot of money if you ever hope to leave the workforce. But there's a difference between just saving and saving smart. Use the above tips to ensure that your dollars stretch as far as possible in retirement.

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3 well-kept retirement planning secrets you need to know - Fox Business

Retirement should be an enjoyable time in your life, but it won't be if you aren't financially prepared for it. Unfortunately, a substantial number of Americans are likely going to be in for a huge financial shock when they leave the working world -- and the surprise they're facing could leave them struggling to make ends meet in their later years.

For most retirees, there are two huge expenses that aren't optional and that can drain their nest egg. And, according to disturbing new research from Edward Jones, an estimated two-thirds of Americans planning to retire within the next decade have "no idea" what they are. Those two big expenses: Healthcare costs and long-term care costs in retirement.

Image source: Getty Images.

It's a major problem that these expenses are going to come as a huge surprise for most Americans, because it's all but inevitable that you'll be paying thousands (or even hundreds of thousands) of dollars for them.

After all, while most retirees can get insurance coverage through Medicare at age 65, it's common to retire before these benefits become available -- which means you could owe thousands of dollars in insurance premiums early in retirement. Medicare also doesn't cover everything you might need, and there are premiums and coinsurance costs to think about. The price tag for out-of-pocket care can be so high that seniors who claimed Social Security at 62 often end up spending as much as 60% of their monthly benefit checks on medical services. These bills are shocking if you aren't prepared for them.

It's also more likely you'll end up needing long-term care than many people realize, with around 70% of people who reach the age of 65 ultimately requiring some kind of nursing home or home healthcare services. Unfortunately, Medicare won't pay for any portion of this care in most circumstances. And while Medicaid covers nursing care, it does so only after you spend down a substantial percentage of your assets. If the high probability you'll need nursing home care, along with the price tag and lack of coverage for it, come as a surprise, this can lead to serious financial pain. That's especially true for those who are forced to drain their joint nest egg to provide care for a spouse, and who are then left with little to live on for the rest of their own retirement.

Covering both medical and long-term care costs can be difficult under the best of circumstances, but it can be devastating if the costs come as a shock, since only those who prepare in advance are likely to have the financial resources they need.

For those who are eligible, preparing could involve maxing out annual contributions to a health savings account, while for others it could mean investing more in a 401(k) or IRA after factoring in the costs when setting retirement goals. For still others, buying comprehensive insurance, including long-term care insurance and Medigap or Medicare Advantage plans, could make sense -- although premiums will need to be budgeted for.

The important thing is, you can't afford to be caught off guard -- so if you're one of the two-thirds of Americans with no clue what these expenses might cost, it's time to change that.

No retiree deserves to leave work and see the nest egg they've spent their whole life building disappear within months or years because of medical needs or long-term care costs.

You owe it to yourself to prepare for these expenses by making sure you have money earmarked to cover them and the right insurance to mitigate them. Now that you won't be surprised by them, you can start making your plans today so these huge costs won't derail your entire retirement and leave you struggling.

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Two-Thirds of Americans Are in for a Huge Financial Shock in Retirement - The Motley Fool

BULLHEAD CITY There have been drive-through testing initiatives, food distributions and graduation ceremonies during the COVID-19 pandemic.

Bullhead City is adding a retirement ceremony for Police Chief Brian Williamson to the list of creative, social-distanced celebrations.

The city is conducting a drive-through retirement celebration for Williamson at 10 a.m. Wednesday in the Bullhead City Administration Complex off Marina Boulevard. It will be preceded by a private, formal retirement presentation at 9 a.m. with the event broadcast live on TV4, online at http://www.bullheadcity.com/tv4live and streamed on the Bullhead City Police Departments Facebook page.

The public is invited to join the farewell retirement drive-through celebration on Wednesday, said a news release issued by the police department. Vehicles may begin lining up at 9:30 a.m. on Hoppas Drive/Gary Keith Park (between Mohave High School and Public Works). The police departments traffic personnel will lead the vehicle procession through the drive-through route, which will head south on Alonas Way to the parking lot of the Bullhead City Justice Complex (the building that includes the police department). The chief will be located by the flag poles outisde the Bullhead City Council chamber.

We encourage people to decorate their vehicles for the celebration. After greeting Chief Williamson from their vehicles, the procession will exit the parking lot on Alonas Way toward Trane Road. The event will be limited to approximately one hour due to the extreme heat.

Participants must remain in their vehicles.

Williamson is retiring, effecting Sept. 1, after a 32-year career in law enforcement that began as a military policeman in the U.S. Army. After a stint with the Mohave County Sheriffs Office, he joined the Bullead City Police Department in 1998. He became acting chief Dec. 6, 2013, following the retirement of Rodney Head. The appointment was made permanent the following May.

Excerpt from:
Drive-through ceremony planned to honor retiring police chief - Mohave Valley News

At 80 years old, I still wake up and go to work every day. I'm ageriatrician and it's a job that I've held for the past 55 years.

Theaverage retirement agein the U.S. around 64. I'm way past that, but I don't plan on retiring anytime soon. Why? For starters, I happen to be among the lucky few who love the work they do. (I know I'm in the minority with this, so I do feel extremely grateful.)

As a doctor who specializes in the care of older adults, I get a lot of questions from people about retirement, specifically in relation to health and longevity. Here's what I tell them:

A reporter once asked me, "Isn't working past retirement associated with longevity?" This was during the 2007 to 2009 financial crisis, when many people had to work past their anticipated retirement due to investment losses.

I replied, "People everywhere are revising their retirement plans. In fact, I came up with my own plan that's pretty simple and guarantees that I won't outlive my assets." The reporter took the bait: "Really? What's that?"

"I plan to die in the office," I said.

All jokes aside, based on my personal experience and from what I've seen in my long geriatrics career, I think it's fair to say that many people continue to work because it gives them pleasure or is financially necessary.

I find happiness in my work for a lot of reasons. Geriatrics health professionals like me and my colleagues are experts in the type of care we'll all need as we age. I get to work with incredibly talented and collaborative people, and what we do is rooted in change that benefits everyone.

Not always. Data behind whether or not later-life retirement is actually healthy are conflicting.

In a study of almost 430,000 people, an older retirement age was linked to a decreased risk of dementia. This was thought to be in line with the "use it or lose it" hypothesis, which suggests that cognitive decline related to age would be less likely to affect people who stay mentally active (in this case, working might help you stay sharp as you age).

Additionally, a2019 Swedish study reported that people who work past 65 have a 7% chance of enjoying better health compared to those who retire at 65. However, retiring later didn't mean better physical fitness, and participants didn't report improved well-being or fewer symptoms of depression, the researchers found.

On the other hand, a 2010 study on thousands of British civil servants contradicted those findings, and suggested that people who voluntarily retired early enjoyed better mental health and physical functioning.

"Voluntarily retired" are the key words there, as there is evidence that mandatory retirement is not good for your health no matter what your financial circumstances might be.

Common sense tells us of three scenarios that can erode happiness and longevity. You may be less likely to enjoy a healthy older age if:

Obviously, those who aren't healthy and active in their 60s or have lost some memory or thinking power may want to consider retiring earlier say, anywhere from their early to mid-60s if possible.

Many people do end up very unhappy in retirement. But those in the opposite group do something differently: They don't sit on a beach all day. Instead, they constantly engage in healthy activities.

A few examples I recommend:

Our understanding of what it means to pursue "healthy aging" is constantly evolving. We used to think exclusively about lifespan. But now, and even more important, we think about health span.

There's a big difference between the two: Lifespan is how long you'll live, while health span is how long you'll live while also being able to do things that are personally meaningful.Healthy agingis about much more than the absence of disease. It's also about our ability to live independently, safely and with a keen eye on what matters to us most as individuals, including when and how we "retire."

What that tells us is that retirement will look different for all of us; there's no hard-and-fast "date" to mark on your calendar, and there's no one right way to retire. You may need to continue working. Or you may not, but still want to, so you cut back to working just a few hours per week.

Supporting your health, safety and independence is really about striking a balance between what you want and what you need with you as the focal point for your choices.

Richard W. Besdine, MD, is a Professor of Medicine and Health Services Policy and Practice at Brown University.He is a member and former president of theAmerican Geriatrics Society.Dr.Besdineis a writer forHealthDay, and has also authored more than 125 publications on aging. He trained in internal medicine, infectious diseases and immunology at Boston's Beth Israel Hospital and Harvard Medical School.

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Original post:
An 80-year-old doctor on why he refuses to retire anytime soon'I plan to die in the office' - CNBC

You might know where you'll live in 10 years and have a pretty good idea of the job you'll have, but could you predict the balance in your retirement savings? If the answer is no, you're not alone. Many American savers aren't even sure how much moneythey'll need to retire -- let alone forecasting their progress along the way.

Having the ability to project your retirement savings growth is a useful skill, because it allows you to recognize and fix contribution shortfalls proactively. The alternative is watching that account balance and waiting for the growth. You might set goals for yourself, such as amassing $500,000 by your 40th birthday. But you won't really know if you're on track until it's too late to adjust your strategy.

Image source: Getty Images.

The good news is that you can easily learn how to project your investment growth confidently. Here's what you need to know.

Your future retirement balance is a function of your balance today, future contributions from you and your employer, your rate of return, and the timeline. If you know these values, you can plug them into a compound interest calculator for a quick gauge of where your balance will be at some future date. It seems simple enough, right up until you have to predict your rate of return. That's the tricky part, because it depends on how your money is invested and what's happening in the financial markets. There's also inflation to consider, which reduces your returns by shrinking the buying power of your money.

For projections of at least 10 years, you can use long-term historic averages in your calculation. If you've ever read a mutual fund prospectus -- and hopefully you have -- you know that historic returns are no guarantee for future results. But they are a better choice for projections than, say, a hopeful guess or a reading from a crystal ball.

So, what are those averages? Inflation has been running quite low in recent years, but the long-term average is 3% annually. The S&P 500 has historically grown about 10% annually. Net those two numbers and you get an inflation-adjusted, average annual return of 7% for large-cap stocks.

You can't just pop 7% into your investment calculator and call it a day, however. You might need to adjust that percentage down based on how you are invested. If your portfolio is comprised of 50% stocks and 40% bonds, for example, your rate assumption should consider that the long-term average of government bonds is lower than stocks, at about 5.5% before inflation. That puts your overall return closer to 5%.

On the other hand, you could also expect high growth rates because you're invested in some aggressive small- and mid-caps or leveraged funds. Know that it's risky to raise your expected return in that case, because those high-growth positions are also more volatile. You could make more on them, or you could make less.

As you start running the numbers, there are a few projection pitfalls to avoid. One is being too optimistic on your rate of return. If you're unsure, use 6% as a conservative starting point. Another pitfall involves your employer matching contributions in your 401k. You can't take those contributions with you if you leave your job and you're not fully vested. If you aren't sure of your future with your employer, don't include unvested contributions in your calculation.

It's also inappropriate to assume your projection predicts the future exactly. The unfortunate side of investing is that the market can be erratic. That's why it's less useful to project investment growth for durations shorter than 10 years -- there's just too much volatility from year to year. If you were investing back in 2008 and 2009, for example, you know that results in a single year can be wildly different from that 7% average. Even in a 10-year window, you might be on pace to reach your goal when a crash in the ninth year suddenly stunts your progress. Always recognize that as a possibility.

Use projections from an investment calculator to evaluate your annual contribution relative to your goals. Say you are contributing $6,000 annually and you expect a 7% return after inflation. Given those variables, you should have $88,702 after 10 years. If your 10-year goal is $250,000, you know you're not going to get there unless you can increase your contributions substantially. You can do that from the get-go, or plan on raising your contributions gradually over time. This calculator lets you test both options.

While that may not be the news you want, at least you know where you stand. It'd be a much harder problem to solve if you didn't realize until year five or six that you weren't contributing enough. And if you haven't even set a 10-year goal yet, at least use your newfound knowledge to find out where you want your retirement savings to be in 10 years.

More:
Where Will Your Retirement Savings Be 10 Years from Now? - Motley Fool

My wife and I had our photo taken standing in front of a 1,000-year-old Sitka Spruce tree, and this got me thinking about the impact of 1,000 years of growth.

I can barely get my mind around a concept of the time that tree began its life, presumably around the year 1020. What was life like back then? Did anybody notice that tree when it was young?

Most likely well never know.

Still, my curiosity was now aroused, and I found an online site with lots of information about inflation. That topic doesnt directly apply to a tree, but it certainly applies to investors.

When I came into the world as an adult, U.S. inflation was very low. To me, the 1953-1966 inflation rate of 1.5% was normal. Something that I could have purchased in 1953 for $1 (more than I usually had as a kid) would have cost about $1.21 in 1966. By then, my ability to spend money had escalated mightily, so it didnt seem like a big deal.

As a result, I was in no way prepared for the next 14 years. From 1967 through 1980, the inflation rate was 7.1%. By 1980, that mythical item which I could have acquired for $1.21 in 1966 would have cost $3.08.

From 1926 through 2019, inflation in the United States and other developed nations has been roughly 3%, so at the moment it seems to make sense to regard that as a reasonable long-term expectation for the future.

Read: Inflation is low now, but it still poses a big threat to retirees financial security

In many parts of the world, inflation is much higher than in the United States. For example, Venezuela (15,000% annual rate as of April 2020), Zimbabwe (319%), Sudan (81.3%), Iran (34.2%), and Libya (22.3%). And no, 15,000% is not a typo.

Theres also the phenomenon of deflation, a decrease in the general price level of goods and services.

Every month, the federal government calculates the Consumer Price Index, which can be translated into an inflation rate. If youre curious, you can find a table here with the inflation rate for every single month going back to January 1914 along with the annual rate.

Scanning the table, youll find some interesting data points.

Double-digit inflation was experienced in 1917 through 1920, ranging from only 15.31% (1919) to 17.8% in 1917. But in 1921, inflation turned into deflation, minus 10.85% to be precise. Even stranger, for seven straight years (1927-1932) year-end inflation was either zero (1929) or negative that is, deflation.

In my lifetime, the highest rates of inflation came in 1979 (11.22%), 1980 (13.58%) and 1981 (10.35%).

So far this century, annual inflation has ranged from -0.34% (deflation again, though slight) in 2009 to 3.39% in 2005. Last year, inflation was 1.81%.

Read: 10 things you should know about diversification

The online page of historical data to which I referred above also has interesting discussions about the nature of inflation, hyperinflation and deflation. You can dig into these topics as much as you wish, and the site has some practical ideas on dealing with inflation.

Theres this advice against holding large amounts of cash: In a world where moderate inflation is the norm, there is little choice but to spend, invest, or be willing to accept a degree of loss due to inflation.

To which I say Amen.

In fact, the U.S. stock market has a history of advancing (over long periods) at a rate that outpaces inflation, and in my opinion thats a more reliable way to keep ahead of inflation than through commodities, real estate, art, or antiques.

Now back to that 1,000-year-old tree.

If we assume a long-term inflation rate of 3%, then over the course of 1,000 years, $1 will grow to $6,874,240,231,169.63.

Thats very impressive, of course.

Read: Should I still use the 60/40 investing rule for retirement?

But now think about this: If you added just one-tenth of 1% to that inflation rate (making it 3.1%), that $1 would grow to $18,141,169,599,823.68 nearly three times as much.

Those numbers contain a powerful lesson for investors who can take a long-term outlook. Even a tiny difference in return (which can result from shaving expenses, for example) can make an enormous long-term difference.

An assumed rate of future inflation is one of the key numbers necessary for thorough retirement planning. Whatever number you pick will have a large effect on the savings you need to afford a given level of spending.

If you assume a higher rate, that suggests you should save more. If you assume a lower rate, the implication is you dont need to save as much.

Inflation is one of the key numbers that I highlighted in a chapter of my book Financial Fitness Forever. The chapter is called Moving to Action: 12 numbers to change your life. You can read that chapter free if you like.

Richard Buck contributed to this article.

See the rest here:
Inflation will have a big impact on your retirement - MarketWatch

Jeanne Butterfield stands up for her beliefs

Kyle Kotecki, kkotecki@pioneergroup.com

Jeanne Butterfield holds a sign outside of the Manistee Post Office Saturday during a rally she organized as "an expression of concern in support" of the U.S. Postal Service.

Jeanne Butterfield holds a sign outside of the Manistee Post Office Saturday during a rally she organized as "an expression of concern in support" of the U.S. Postal Service.

Photo: Kyle Kotecki/News Advocate

Jeanne Butterfield holds a sign outside of the Manistee Post Office Saturday during a rally she organized as "an expression of concern in support" of the U.S. Postal Service.

Jeanne Butterfield holds a sign outside of the Manistee Post Office Saturday during a rally she organized as "an expression of concern in support" of the U.S. Postal Service.

Meet the retired lawyer who organized the rally in support of the USPS

Manistee's Jeanne Butterfield is not one to sit idly by in the face of what she sees as malfeasance. Butterfield prefers a more proactive approach.

When troubled by changes in the U.S. Postal Service, Butterfield took action, organizing a rally held outside of the Manistee Post Office Saturday morning as "an expression of concern in support" of the U.S. Postal Service.

"We've seen several disturbing actions since (Louis) DeJoy was appointed Postmaster General: cuts in overtime, slowing down of service, dismantling of sorting machines and removal of actual mailboxes from some city streets around the country," Butterfield said. "That comes on the heels of statements by some of our political poobahs that the post office should be a profit-making venture. We're here to say it's not it's an essential service.

"It's critical to our small towns, and rural communities need it not only for personal mail but for prescription medicines, benefits checks," she continued. "And then looking ahead, during a pandemic especially, we need a reliable mail service to get our votes mailed in so we don't have to stand in line and expose ourselves on Election Day."

Butterfield has dedicated her life to making a difference, working as an immigration lawyer and continuing to stand up for various causes in her retirement.

"I was an immigration lawyer and I did national immigration policy work, mostly in Washington D.C.," she said. "I'm the former executive director of the American Immigration Lawyers Association. I've always been active on issues of concern to our communities."

Butterfield, along with husband Al Frye, is a member of the We the People Action Network of Northwestern Michigan, which is a local, non-partisan, grassroots network dedicated to education, advocacy and action around issues of concern to the local community.

"Al Frye is my husband and one of the co-organizers (of the rally)," she said. "We have had this little network called We the People Action Network of Northwestern Michigan. It's done a number of events over the years here and that was some of the impetus behind this."

Butterfield settled in Manistee after retirement and, not content to spend her days relaxing, continued advocating for worthy causes.

"I'm a born and raised Michigander," she said. "I came back to Manistee in my retirement and I've been active in the community here ever since."

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Meet the retired lawyer who organized the rally in support of the USPS - Manistee News Advocate