Only half of Americans save enough for retirement, research shows

About half of Americans won't be able to keep up their standard of living after retirement because they aren't planning well enough, according to a new Ohio State study.

The study examined the spending habits, savings and investments, and planned retirement dates of 1,387 households that took part in the 1995 Survey of Consumer Finances. The survey is conducted every three years by the Federal Reserve and the U.S. Department of the Treasury.

The study found that 48 percent of Americans would not be financially prepared to spend as much after retirement as they did before.

In their analysis, the researchers used only those respondents who were between the ages of 35 and 70, worked full-time, indicated when they planned to retire, and had noninvestment income above the poverty level.

The researchers found that respondents' current level of spending, not including money going to savings and investments, and the age they plan to retire had the most effect on whether or not they could keep up their standard of living after retirement.

The study was published in a recent issue of the journal Financial Counseling and Planning.

"One of the unique aspects of this study is that we used a national survey that asked people when they want to retire," said Sherman Hanna, professor of consumer finances in Ohio State's College of Human Ecology. Hanna co-authored the study with assistant professor Catherine Phillip Montalto and doctoral student Yoonkyung Yuh.

Similar surveys usually assume that people will retire at about age 65, Hanna said.

"There is tremendous range in when people want to retire, from age 50 or even younger, to never," he said. But people who are planning to retire early need to save and invest more, because they have fewer years to do it and they'll have a longer retirement.

In this study, 35 percent of respondents said they would like to retire at age 61 or younger; of them, only 44 percent would be able to spend as much during retirement as when they were working.

On the other hand, 55 percent said they would like to retire between the ages of 62 and 65; of those, 54 percent would have enough retirement resources so they would not have to curtail spending. Some respondents -- 10 percent -- said they planned to retire at age 66 or later. Of them, 68 percent would have adequate retirement resources.

Current level of spending also had a significant effect on whether a household would have enough resources for retirement, Hanna said. In the survey, 51 percent of respondents said they spent as much as or more than their income in the previous year; of them, only one-fourth would have enough income during retirement to keep up their standard of living.

On the other hand, three-fourths of the 49 percent who spent less than their income during the previous year would have enough resources for retirement.

"One of the promising things about these results is that these are two factors (retirement age and spending habits) that people can easily change," Hanna said. Having a job with a defined benefit retirement plan, owning stocks, or building up home equity all help, but not as much as spending and planned retirement age, he said.

Although investment houses and financial firms occasionally conduct "retirement adequacy" analyses, few such studies have been printed in research journals over the past decade, Hanna said. As a result, there is no set standard for what factors should be included when determining if a household will have enough resources for retirement, he said.

The researchers had to make several decisions that affected their analysis. They assumed people would want to maintain their standard of living after retiring, so they used respondents' estimates of current levels of spending and data from the 1993-94 Consumer Expenditure Survey to estimate household expenditures.

"Some analysts say you need only 70 percent of your pre-retirement income after retirement, and it's true that when you retire, you don't have the expenses of retirement plan contributions or payroll taxes," Hanna said. "But we didn't like the idea that part of this 70 percent reduction is based on the fact that households spend less after they retire.

"It's possible that retirees spend less only because they hadn't saved enough. We decided the best measure for retirement adequacy would be to use their current level of spending."

The researchers also decided to include home equity in the measure of a household's asset accumulation. That's not always done because so many retirees want to stay in the home after retirement. "We included it so we could compare renters and homeowners," Hanna said. The study found that homeowners without a mortgage were more likely than renters or homeowners with a mortgage to have adequate retirement resources.

The study can be accessed on the Web at www.afcpe.org.

What the study found:

• 48 percent of Americans would not be financially prepared to spend as much after retirement as they did before.

• 35 percent of respondents said they would like to retire at age 61 or younger; of them, only 44 percent would be able to spend as much during retirement as when they were working.

• 51 percent of respondents said they spent as much or more than their income in the previous year; of them, only one-fourth would have enough income during retirement to keep up their standard of living.

University goes full-time with live class registration for winter quarter 2000

Class registration at Ohio State has come full circle with the advent of live registration for winter quarter 2000.

The registration process began as a live system in which students used pencil and paper to request classes through their advisers who then forwarded the request to schedulers who used large scheduling boards to write out student schedules.

The current registration process -- which was introduced in spring 1988 -- uses computer-assisted registration, where students are issued days and times when they can request courses through Brutus, a telephone registering process.

The computer-assisted scheduling takes all the requests and runs them through a set of alogarithms to generate class schedules and fees which are then mailed to students notifying them of their class assignments several weeks later.

The new system will allow students to register directly into classes instead of requesting courses and waiting weeks to see the results.

"Live scheduling gives students the opportunity to recieve immediate course enrollment feedback," said Brad Myers, acting registrar for the University. "I think live registration will be a nice change for the University, with lots of benefits."

Summer quarter course registration already uses the live scheduling process because of the smaller number of students taking summer classes. Late class scheduling also uses live registration.

The live registration method will continue to use a University priority grouping to determine student schedules. The priority system assigns classes first for honors students, disabled students and varsity athletes, followed by graduating seniors, graduate and professional students and then by class rank.

Myers said the driving force behind the implementation of live registration comes from recommendations from the Committee on the Undergraduate Experience (CUE) report that was prepared by a group of administrators, faculty, staff and students in the spring of 1994.

One of the recurrent themes of student complaints was the need to reduce the bureaucratic runaround.

Myers said some of the benefits of live registration include immediate feedback to students, more time to choose alternative classes for filled courses, more time for adviser review, and more time for students to plan and purchase books.

"Live registration is an advantage for students because they will be able to plan better. They will know their class schedule immediately. It means less running around," said Toni Payne, student records and registration coordinator in the University Registrar's office.

As for future plans for registration, Myers said that the Internet will probably play a more integral part of the process.

"My guess is that students will gradually rely less on telephone registration and more on registration via the Web because it offers a better opportunity to intergrate registration, course offerings and student academic needs and interests," he said.

Myers said he and several colleagues have made presentations to adminstrative and academic units on campus in recent weeks to introduce and explain the live registration process and what it means for the University. He said the presentations will continue and be introduced to students throughout spring quarter.

Faculty and staff memberships available at OSU Golf Course

Full- and part-time or retired faculty and staff are eligible for membership to the University Golf Course at the corner of Kenny and Tremont roads.

Employees must have at least a 50 percent appointment. Retired faculty must have emeritus designation or at least 25 years of service. Retired staff must have at least 25 years of service, not including buyouts.

Golf course members can schedule advanced tee times, bring guests, and rent lockers and space to store their clubs. They also are eligible to join the Scarlet and Gray Club for tournaments.

Annual membership costs are $1,290 for faculty and staff, $1,280 for adult dependents, and $600 for dependents younger than 21. An associate faculty-staff membership costs $640 a year, but golfers must pay a greens fee of $25 per round.

Faculty and staff also can present their University ID cards to play 18 holes for $25 a round.

next page...