Saving has always been a challenge for working families and older workers struggling to make ends meet. Often every dollar that comes into the household must go back out to meet a basic need. Given the current economic climate, all Americans are very worried about their own financial well-being. As a result, regardless of circumstances, many are finding ways to save despite already tight budgets. According to two government reports released by the Department of Commerce and discussed in a New York Times article, the personal saving rate in the last three months of 2008 rose to its highest level in six years.
Advocates working on behalf of low-income individuals and families recognize that in these tough times, it is even more difficult for people to save enough for retirement, especially with 401k plans and employer supported savings opportunities diminishing. For those barely making ends meet, it might seem unimaginable to save, especially if there’s no goal or standard in place for how much is needed for retirement.
Our standard, the Elder Economic Security Standard Index (Elder Index), created in partnership with the Gerontology Institute at the University of Massachusetts Boston, shows younger workers, baby boomers and recent retirees what exactly is needed where they live to make ends meet. Using this new geographically-based measure of income adequacy, one can then determine what they need to save to live the lifestyle they choose in retirement.
Saving is an important concept, but if not guided by specific and realistic measures of income adequacy in retirement can be frustrating and overwhelming, ultimately, having less of an impact in the long-run.