As life spans get longer, it's vital to start earlier in building retirement savings

November 29, 1992|By Martha Groves | Martha Groves,Los Angeles Times

No fanfare greeted the moment, but sometime in July 1983, the number of Americans over age 65 surpassed the number of teen-agers, and the United States changed from a nation of youths to a nation of elders.

Today, the over-85 group is the quickest-growing segment of the population and could more than quintuple, to 20 million, by the year 2050. By 2080, Willard Scott's "Today Show" successors could be wishing happy birthday to 5 million U.S. centenarians.

Thanks to biomedical progress and healthier lifestyles, people are living longer. That's the good news.

The bad news? You'll have to support yourself for three full decades after retirement -- a dozen years longer than retirees today.

"People have to be aware that they may outlive their resources," says Don Underwood, vice president of retirement plans and services at Merrill Lynch.

Worse yet, most people already underestimate how long they will live and how much money they'll need in their later years.

According to a Merrill Lynch poll, people in their 30s are increasingly beginning to see that they, not their employers or Uncle Sam, are responsible for ensuring that there will be a nest egg to tap in their final years.But many of these same people aren't setting aside any more for retirement than in the past.

Fortunately, it's not too late. You can plan for really old age. It will mean sacrifices in your middle years, but it will be worth it. The important thing is to start as young as possible and to keep investing on a regular basis.

The key is not to become too conservative too soon by cashing in growth stocks or mutual funds and turning to bonds for fixed income. Inflation will get you if you do.

"Especially if you're going to live to the ripe old age of 90 or 100, you really need growth," says Barbara Brandell, San Francisco branch manager for Fidelity Investments.

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