Many people within this demographic say the market and economic dislocation has prompted them to reduce their standard of living or reduce expenses (63.1 percent for ages 60-69 and 66.6 percent for ages 70 and older). Three in four people in their 60s (75 percent) say their No. 1 financial priority in retirement is simply keeping up with daily expenses.Older Americans have differing views on their greatest risk in retirement. Those in their 60s worry most about a significant health event or problem (33.7 percent), with outliving their money (26.1 percent) coming in second. Meanwhile, people age 70 and older say their biggest concern is outliving their money, followed by losing their buying power to inflation (22.3 percent) and losing money in the financial markets (22.1 percent). Foster said investment and financial tools are available to help older Americans repair their retirement savings and potentially reclaim their retirement dreams:
- Many people who have access to a defined contribution retirement savings plan such as a 401(k) can save as much as $16,500 in 2010. Most people do not come close to saving the maximum. At the very least, contribute enough to realize the full match from your employer, if available.
- If you are age 50 or older, you may be able to save another $5,500 a year, every year, for as long as you are working and enrolled in your employer’s plan.
- Contribute to tax-deferred retirement savings vehicles such as 401(k)s, Roth IRAs or annuities, if appropriate, to maximize the growth potential of your savings. Savings compound faster if you defer taxes on your earnings.
- Many Americans can contribute up to $5,000 a year to regular or Roth IRAs, another way to accumulate retirement savings. A regular IRA allows you to deduct your retirement savings on your federal income taxes, while a Roth IRA allows you to take your retirement savings tax-free.
- Modestly compensated employees can qualify for a special federal Saver’s Credit based on contributions to a defined contribution retirement plan or an IRA. The credit is designed to encourage retirement savings. The tax credit can equal as much as 50 percent of their total contribution, capped at a total credit of $1,000, depending upon the level of contribution and the employee's income. The credit is available on a sliding scale to those who are age 18 or older; do not attend school full time; are not claimed as a dependent on another federal tax return; and whose adjusted gross income does not exceed $27,750 for single filers and for those who are married filing separately. The income limit is $55,000 if married filing jointly, and $41,625 if head of a household with a qualifying person.
- Business owners can contribute as much as $49,000 annually to a 401(k), with the appropriate plan design. Although most people cannot afford to contribute this much to a retirement plan, there are many owners of successful businesses, medical or legal practices that can and do. The additional $5,500 contribution is also available to those age 50 and older.
- Successful, established businesses can set up a cash balance defined benefit plan. A cash balance plan can complement an existing 401(k) plan, enabling participants to accumulate additional assets for retirement. With the right plan design, owners of the business can put aside significant assets in a cash balance plan.
About The HartfordCelebrating 200 years of helping its customers achieve what's ahead, The Hartford (NYSE: HIG) is an insurance and wealth management company. Through its unique focus on customer needs, the company serves businesses and consumers by providing the products and solutions they need to protect their assets and income from risks and manage their wealth and retirement needs. A Fortune 100 company, The Hartford is recognized widely for its service expertise and as one of the world's most ethical companies. More information on the company and its financial performance is available at www.thehartford.com. HIG-W This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. This information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice. Many tax planning strategies emphasize the deferral of current income taxes, on the basis that your federal income tax rate may be lower at retirement. Please keep in mind that federal income tax rates are unpredictable and may be higher when you take a distribution than at the time of deferral. Other factors, including state tax rates and your income, may also affect your overall tax rate upon distribution. Please consult with your tax advisor for individual tax planning strategy and advice. The Hartford does not predict or in any way guarantee favorable tax results. Cash Balance plan designs are complex and require the assistance of legal and tax advisors and third party administrators. Additionally, Cash Balance plans, like defined benefit plans, generally require annual employer funding and they may not be suitable for some businesses. The Hartford’s materials highlight Cash Balance plan advantages, but certain restrictions and limitations will apply based on plan design and retirement plan rules, among other factors, which may affect tax deductions, funding levels and distributions of plan benefits. For a more complete picture of Cash Balance plans, please contact The Hartford at (800) 874-2502 Option 4.
Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in our Quarterly Reports on Form 10-Q, our 2009 Annual Report on Form 10-K and the other filings we make with the Securities and Exchange Commission. We assume no obligation to update this release, which speaks as of the date issued.Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6449718&lang=en