Troubling economic times impact retirement dreams

Two reports released by AARP recently paint a bleak picture for retirement dreams today and in the future.

Thirteen percent of Americans 45 and older are withdrawing money from their retirement accounts, or other investments, to cover day-to-day expenses, according to the report "Retirement Security or Insecurity? The Experience of Workers Aged 45 and Older." The report also found that 20 percent have stopped contributing to retirement accounts during the past 12 months, which is further jeopardizing their long-term retirement dreams. For millions, saving for retirement at work is not an option at all.

The second AARP report found that about 51 percent of workers don't have pension coverage at their current job. In "The Coverage of Employer-Provided Pensions: Partial and Uncertain," AARP found that millions of Americans lack the ability to save for retirement at work as businesses shift the burden of risk toward employees.

"Individuals already feel like they aren’t saving enough for retirement and the current economic situation is depleting what little they have," said Jean Setzfand, director of Financial Security at AARP. "Many people are making quick-fix decisions that put their financial future at risk."

Although times are tough, Setzfand said people should keep saving, even small amounts.

"Not only do we need to maintain the rate at which we are saving, but we need to increase access so more individuals have the option to save at work," she said. "One way to accomplish this is through the Automatic IRA, which can help more Americans reach their retirement dreams."

Because those who work for small employers are less likely than other employees to have access to employer-sponsored retirement plans, AARP has spearheaded Automatic IRA legislation in order to increase the possibility of retirement for more Americans. Currently, only 44 percent of employees working for employers with less than 100 employees have access to an employer-sponsored plan.

The Automatic IRA would put a payroll deduction mechanism in place for individuals who work for a business with more than 10 employees, that has been in business for two years, and does not currently offer a retirement plan for their employees.