'Curious' Savers Worry About Retirement

With rocky financial times making us all more than a little nervous, people everywhere are talking about their economic futures.

One place they're doing that is WBZ's "Declare Your Curiosity" Web site. One of the big topics is what this rough economy means for people of all ages who are trying to save for retirement.

Deb from Waltham wrote: "Will I have enough money to live on when it's time for me to retire?"

Great question. It's probably a shock these days when you open up your 401k statement. And with gas prices going through the roof, and food prices doing the same, it feels nearly impossible to save for retirement. So we took the question to Boston University economist Laurence Kotlikoff. He's the co-author of a new book called "Spend 'Til The End," a guide to maintaining your living standard for a lifetime.

He says some people are actually saving too much for old age. "About 30 percent of American households are over-saving and we have another 40 percent that are under saving," he says.

In either case Kotlikoff blames the financial services industry. "They really are trying to sell you product. They're not trying to give you good advice," he says. "Then you're induced to invest in very risky investments in order to hit these targets that are too high."

Saving for retirement is a complicated equation, with different advice for people of different ages and stages of life. Even younger people are thinking about it. Nicole from Hopkinton wrote on WBZ's "curiosity" Web site: "I'm curious how the current generation in college is going to make it in life."

Kotlikoff says it's best to prepare early. Start by outlining every milestone you may hit, like buying a home, having children, changing jobs, and whether you'll be taking care of aging parents. That way you'll tailor your plan to your individual needs. He also has this general advice. "They should definitely contribute enough to their 401k plan to get their employer's match. That's almost like free money," says Kotlikoff. "Once you've contributed a certain amount to your 401k, you've got to make sure it's invested wisely. You don't want to be putting it into your employer's stock. That's going to help your employer, but it's not going to help you. You'll be very undiversified," he adds.

And if you're going to have some of your money in stocks, he recommends index funds to keep your costs low. "Making the right economic decisions here, the right moves, can make your life a lot easier," says Kotlikoff.

He also believes that taxes are heading up. So he recommends Roth IRA's for most people because withdrawals are tax free. And, he likes the safety of "TIPS," which are Treasury Inflation Protected Securities.

If you'd like to get information about a calculator developed by Laurence Kotlikoff you can go to his Web site at: www.esplanner.com.

To become part of the conversation and tell us what you're curious about, check out: wbztv.com/curiosity.

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