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Lifetime financial security is a cornerstone of the American dream, but it is a dream that is becoming harder to realize for many Americans reaching retirement age. Too many people can’t afford to retire, and too many do not understand basic financial concepts and frequently underestimate the amount of money needed to ensure a secure retirement. Only 27 percent of workers age 40 and older are confident that they will have enough money to live comfortably through retirement.

People are simply finding it more difficult to save for retirement, frequently relying on Social Security as a main source of retirement income. Nearly two-thirds of current retirees rely on Social Security for most of their income; however, Social Security only replaces about 40% of an individual’s pre-retirement income. Years ago, employer-sponsored pensions guaranteed a secondary source of retirement income. However, traditional pension plans are disappearing—only 1 out of 5 workers today have a pension plan.

AARP has developed some tools and resources to help educate people about how to build financial security for retirement. Defined contribution plans, such as 401(k) plans, are positive ways to save money for retirement. Many employers match contributions, and employees are simply leaving money on the table.

AARP Illinois is working with community and business leaders, including the U.S. Department of Labor Women’s Bureau, to form a broad statewide coalition to tackle the problem. Through AARP’s collaboration with the Women’s Bureau, an outreach group has been created that will address the issue of automatic 401(k) enrollment among women and minority-owned businesses in Illinois. The outreach group was formed as part of Illinois’s Financial Security Lab efforts and is educating and encouraging employers to adopt automatic 401(k) plans—helping to ensure lifetime financial security for employees that do not currently have access to employer-sponsored retirement plans.
 
The Women’s Bureau has also developed Wi$eUp, a financial education program for women in support of the Department of Labor’s Strengthening the Family Initiative. The Wi$eUp website, www.wiseupwomen.org, offers numerous resources to teach consumers about saving, investing, insurance and other tools to help become and remain financially fit.

In addition, AARP Illinois is supporting federal legislation that would require small businesses to automatically enroll their workers in an individual retirement account (IRA). Employees could opt out of the IRA, but automatic enrollment would help to eliminate some of the stumbling blocks to participation in employer-sponsored savings plans.
  
It’s important for community leaders, business leaders and employers to start working together to address financial security issues. Employees and individuals also have a responsibility in ensuring their financial security. To take advantage of all of the resources that AARP has available to help you in planning for your financial future, visit www.aarp.org/money. A secure retirement hinges on solid financial planning. Is your nest egg ready?