6 Excuses for not Saving for Retirement

Do you need an excuse? Like the proverbial grasshopper, some people neglect to save for retirement and have plenty of excuses to justify their lack of foresight. Every year, the Employee Benefit Research Institute conducts its retirement confidence survey to gauge how prepared Americans are for retirement. The 2010 survey, released in March, found that 54 percent of workers have less than $25,000 saved, excluding the value of their home and any defined benefit plans. The justifications are endless and investment advisers have heard them all. While some excuses are grounded in reality, others defy logic.

I'm paying for my kid's college education Higher education costs money, as does retirement. Though it's a noble goal to fund Junior's college education, it shouldn't come at the expense of saving for retirement. "Everyone wants to retire; not every kid goes to college," says Peter Donohoe, Certified Financial Planner at PRW Associates in Quincy, Mass. "If you do have kids that go to college, there are options for kids, student loans and scholarships," he says. Obviously, no such loans exist for retirees. Given the near extinction of defined benefit plans -- those pension plans where companies foot the retirement bill -- workers need to completely overhaul their spending and saving priorities. "People have not been willing to make the sacrifice to save more for retirement. This is really going to hit home when we see people hitting retirement age and not being able to retire," says Carrie Coghill Kuntz, director of consumer education for FreeScore.com.

My parents died young Expecting to die young is not a retirement plan. It's tragic when it happens, but it cannot be relied upon as a reason to spend every cent in the present. "Health and medicine are different now, and statistics are showing that people are living a decade longer. What happens if you don't die at 60?" says Certified Financial Planner Susan Hirshman, president of SHE Ltd., a financial services consulting firm, and author of "Does This Make My Assets Look Fat?" Another investment adviser runs her clients' financial plans to age 100. "We tell our clients to have their retirements funded 120 percent. I say, 'Listen, do you have an aunt or uncle who lived into their 90s?' People don't realize how much they really need to save for retirement," says Rosann Roge, a Certified Financial Planner at R.W. Roge & Co. in Bohemia, N.Y. The prospect of being a penniless 99-year-old should spur many people to save more, but procrastination persists.

I'll live on Social Security According to the 2010 trustees report from the Social Security Administration, Social Security reserves will run out in 2037. Projected tax income should be able to cover 75 percent of benefits through 2084. The best-case scenario for younger generations of Americans, with no action from Congress, is 75 percent of their scheduled benefits. That will be far from adequate to cover living and health care expenses. Today, full Social Security benefits barely allow seniors to surpass the poverty line. The average monthly benefit for retirees is $1,172, according to the Social Security Administration. "People believe that their lifestyles will change significantly in retirement. And study after study has shown that it does not. Many planners say that people will need 70 (percent) to 80 percent of their working income as retirees. I'm up there closer to 100 percent," says Hirshman. As the maximum Social Security payout is $2,300 per month, it's likely that savings will have to make up a large portion of your future retirement income.