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RETIREMENT
PLANNING |
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April 30, 2002 |
Dow Jones
WebReprint ServiceŽ |
By JEFF D. OPDYKE
Staff Reporter of THE WALL STREET JOURNAL
What will your retirement look like?
Will you be secure and satisfied? Or financially unstable and fearful? And
if you knew what was in store, would you change your course of action? A new
study to be released Tuesday morning could provide a road map to the life you
want -- or don't want -- when your current working days end.
The study, conducted by market-research firm Harris Interactive and
gerontologist Ken Dychtwald, segments current retirees based on their
experiences in retirement, and shows how each segment arrived at their current
point in life. For today's workers, the knowledge can serve as a guide as they
move toward retirement.
The study was sponsored by financial-services firm AIG SunAmerica Inc.,
which says it will use the results to educate its agents about the various
financial paths to retirement.
A Chance to Change
For those still in the work force, Mr. Dychtwald says, the broad message of
the research is that "everyone is on a course. ... When you realize what
track you're on, you have a chance to make some changes."
So, what track are you on?
Well, the research revealed that there are essentially four broad categories
of retirees, which the study labels: Ageless Explorers, who are in control of
their lives and eager to attack new ventures; Comfortably Contents, financially
fit and perfectly happy to live the Golden Years lifestyle; Live for Todays,
who see retirement as a whole new life, but are anxious about their financial
preparedness; and the Sick & Tireds, who failed to plan adequately and feel
unfulfilled in retirement.
By examining the choices those retirees made leading up to retirement, the
researchers say, it is possible to essentially reverse-engineer the investment
traits that produced the happiest retirees.
The biggest key to satisfaction, the study found, was financial
preparedness. While the most satisfied retirees do tend to have higher net
worths, happiness was more a function of advance planning than pure wealth,
says Humphrey Taylor, chairman of the Harris Poll, a service of Harris
Interactive.
"People really don't know the size of the financial base they need to
live the lifestyle they want in retirement," says Mr. Taylor, "but
the longer you save, the happier you are because you feel prepared."
Two factors in preparedness, researchers note, were length of time spent
planning and diversification of assets. The most satisfied retirees, regardless
of the size of their nest egg, saved for about 24 years, according to the
study. The least satisfied: 11 years. And retirees who say they're most
satisfied about retirement tend to have put money into a variety of
investments.
In particular, retirees lean heavily toward individual retirement accounts,
or IRAs, and company-sponsored retirement-savings plans such as a 401(k) or
403(b). Though that doesn't necessarily mean they maxed out their contributions
to these plans; those numbers aren't available.
The happy retirees also were buyers of mutual funds and individual stocks and,
to a lesser degree, bonds and real estate. A smaller percentage purchased
annuities and long-term-care insurance.
Investing in Nothing
Conversely, those who are most fearful in retirement today did little to
help their own cause when they were younger. They rarely contributed to
tax-advantaged savings plan such as 401(k)s and IRAs, though such plans don't
require especially large investments. And they weren't big buyers of stocks,
bonds, mutual funds or real estate. In fact, 26% of the most unfulfilled group
of retirees, the so-called sick and tireds, basically invested in nothing.
"You can see exactly how people wind up in the circumstances they're
in," says Mr. Dychtwald, "and it shows you have control over what
your retirement is going to be."
The statements and opinions expressed in this
article are those of the author. Neither Fidelity Investments nor any Fidelity
Investments affiliate can be held responsible for any direct or incidental loss
incurred by applying any of the information in this article. Fidelity
Investments cannot guarantee the accuracy or completeness of any statement or
data. The information provided herein is for informational purposes only and
should not be construed as investment advice or legal opinion. Please consult a
tax or investment professional regarding your specific situation.
Reprinted with permission from the Dow Jones WebReprint Service as it
appeared in The Wall Street Journal on April 30, 2002 and supplied by Fidelity
Brokerage Services (Member NYSE, SIPC), 100 Summer Street, Boston, MA 02110.
This reprint should not be construed as an offer to sell or buy any
product mentioned in this article.