Are You Ready to Retire?

August 2003 - Are you ready to retire? As you stare into the gray-blue expanse of your computer screen or sit through another meeting, your answer might be yes. While you may be personally ready to retire, are you financially ready to do so?

To retire comfortably or with financial resources beyond living expenses requires a combination of time or careful planning and diversification. At this point in your working life, are you confident that you will have enough money to retire? If you answered “yes” or “maybe,” you agree with 66% of Retirement Confidence Survey (RCS) participants who either responded they were “very confident” or “somewhat confident” that they will have enough money for a comfortable retirement.

Developed annually by the Employee Benefit Research Institute, the American Savings Education Council and Mathew Greenwald & Associates, the RCS also revealed that some of this confidence, or perhaps overconfidence, is based on lack of knowledge. Many workers simply do not know how much money it takes to retire.

Did you know you would need 70 to 80% of your current income to retire comfortably?

According to the RCS, this chronic lack of knowledge, coupled with the avoidance of proper money management or living for today while forgetting about tomorrow, could prevent you and millions of other Americans from properly preparing for retirement.

How Are Your Savings?

Not knowing how to properly prepare for retirement is also prevalent among African Americans and Hispanic Americans, a separate Minority RCS revealed. Couple this with other RCS findings such as cultural and/or language problems, less access to jobs offering retirement savings plans and both groups have greater barriers to savings compared to other workers. “African Americans and Hispanic Americans still lag behind workers overall in terms of their income and their savings,” said Dallas Salisbury, CEO and president of Employee Benefit Research Institute.

There is good news. According to Salisbury, more African Americans and Hispanic Americans

“are saving now than before. The percentage of African Americans who say their household has saved for retirement was 47 percent in 1998, 54 percent in 1999, 54 in 2001 and 59 percent in 2003. The percentage of Hispanic Americans who say their household has saved for retirement was 37 percent in 1998, 48 percent in 2001, and 50 percent in 2003.”

Still, these savings may not be enough because the RCS also found that both groups are looking to Social Security as the primary source of their retirement income.

What About Social Security?

With Washington murmuring about privatizing Social Security and even the Social Security Administration admitting in a 1999 report that it “provides a minimum foundation of protection for retired workers,” minorities will need to seek other retirement resources.

“Social Security will not be enough to maintain your lifestyle,” said Cathey Williamson, an Edward Jones investment representative based in St. Louis. “At Edward Jones we help people take responsibility for their finances so that if Social Security is not enough or something happens, they'll still be okay.”

Founded in 1871, Edward Jones, the largest financial services firm in the U.S. in terms of its more than 8,800 branch offices, is one of the first firms to take investing out of inaccessible boardrooms and impersonal multi-story office buildings to the investor.

A Sound Financial Future Should Be Available To Anyone

Edward Jones' belief that a sound financial future should be available to anyone inspires Williamson and thousands of fellow investment representatives to work carefully and closely with prospective, new and current clients. “The way our branch offices are set up, we deal with you on a one and one basis where you are either talking with the branch office administrator or myself,” she said. ‘When you come in, we're going to talk about your realistic retirement goals and the amount of time you have to achieve them.”

Williamson also assists her clients by educating them about Edward Jones’ various financial services and products such as stocks, IRAs and mutual funds.

“I love when people's eyes light up when they realize they can do something about their financial futures that does not require a lot of money,” she said.

Williamson recommends portfolio diversification in the following investment objectives to assist you in creating a more secure future:

1. Cash
2. Income
3. Growth & Income
4. Growth
5. Aggressive Growth

“Diversification is vitally important. When one investment objective is not working or going through a downturn, one of the other may help balance it out. Think of it as not putting all of your eggs in one basket,” she said.

Williamson says investing for a comfortable retirement requires time, careful planning and diversification and can be the difference “between an okay life and a great life.”

Which life will you choose?

For more information about various investment and retirement products, visit www.edwardjones.com .