Catching up

Associated Press

NEW YORK – For many years, Rochelle Beck didn’t give much thought to saving for retirement.

A single woman living in Miami, she was busy building her crafts import business. She was paying a mortgage. She was traveling.

“It really hit me when I turned 45,” she said. “I was getting older, and I had almost no savings. Any money I had, I plowed into my business.”

It then occurred to her: “I had nothing for my future, and I needed to be responsible for that. I didn’t want to be old and poor.”

Many baby boomers haven’t yet come to terms with their retirement needs and have a lot of catch-up saving to do.

A recent poll by Maritz Research found that one in four Americans aged 35 to 54 has saved less than $5,000 for retirement, and the latest survey by the nonprofit Employee Benefit Research Institute in Washington found that Americans’ are less confident they’ll have enough money to live comfortably in retirement.

Beck sought professional advice to get her retirement savings going. She went to her broker’s office, filled out a questionnaire about her goals and “got a lecture on what regular savings and compound interest can do for you.”

She started having money transferred automatically every month to an investment account earmarked for her retirement. Now, at 53, she feels confident her future is more secure.

“I may never retire, because I’m the kind of person who likes work,” she said. “But at age 65, I won’t have to worry about money.”

Scott Bordelon, a financial planner in Covington, La., believes that the problem for many Americans is that they procrastinate when it comes to retirement saving.

“People say, ‘Once I pay off my credit card debt, once I pay for the kids’ education, once I get the house paid off, then I’ll start saving for retirement,’ ” he said. “That’s not a good strategy. You need to allocate something to all your goals.”

He also is an advocate of the “pay yourself first” philosophy: “A lot of people say they’ll save whatever is left over at the end of the month. Well, there’s never going to be anything left over. You have to save first, then spend what’s left.”

Bordelon and other experts point out that the new tax law passed by Congress earlier this year contains a number of provisions to encourage boomers to increase their retirement saving.

In addition to raising the contribution limits for 401(k) and 403(b) retirement accounts to $11,000 next year, the legislation will allow Americans 50 and older to invest an additional $1,000. The limit for Individual Retirement Accounts will rise to $3,000, with a $500 catch-up provision for older Americans.

“Clearly, if you have the wherewithal to invest additional dollars, you should do it,” said Bob Trinz of RIA, a New York-based provider of tax information to accountants and other tax professionals.

The problem, Trinz pointed out, is that many Americans can’t afford to put the maximum into these tax-deferred accounts. “I certainly can’t,” he admitted. “Not with three kids in college at the same time.”

Ellen Hoffman, author of “The Retirement Catch-Up Guide,” notes that there are alternatives for boomers who feel they haven’t saved enough.

“If you’re 30, you skip a meal a week in a restaurant and put that into savings and you’ve got a good start,” Hoffman said. “If you’re 50, you face tough decisions – and there aren’t easy answers.”

One possibility is to try to earn more, either by pushing for a raise or by changing to a job that pays more and has better benefits, she said. Another is to consider working two or three years longer than you intended to keep money coming in and to boost pension benefits.

“Or get a part-time job now. Moonlight. Consult. And save every penny you can,” she said.

Hoffman also suggests that boomers start “downsizing” to reduce their money needs now and in the future. That could include moving to a smaller house with lower utility, insurance and maintenance costs.

Gary Aldridge, 60, was able to retire in 1999 by cutting his day-to-day living expenses and moving to the country.

“Income has been a big factor in whether people retire,” he said. “Maybe we should look at the overall quality of life issues first. That is, decide the kind of life you want and then figure out how to get there.”

Aldridge did it in steps. He took early retirement from his job in the U.S. Senate in 1992, sold his condominium in Washington, D.C., and moved with his dog and two cats to rural West Virginia.

For the next seven years, he worked about half-time as a consultant on environmental and animal rights issues.

“That allowed me to make some extra money, and I could pick and choose the projects I really wanted to do,” he said.

Fully retired for the past two years, Aldridge still enjoys rural life and pursues projects that interest him. These days, he’s a volunteer on a project on global climate change that is sponsored by the West Virginia Council of Churches.