December 10, 2004

Stop spending and save for retirement

People are bombarded daily with messages telling them to spend their money. University of California Cooperative Extension (UCCE) is a voice encouraging them to save, and offers a variety of tools to help them do so.

“We give consumers unbiased retirement, savings and investment information they can trust — no sales pitches, no fees, no commissions,” said Karen Varcoe, UCCE consumer education specialist. “Our resources are easy to use and can be accessed at the consumer’s own pace, giving them an excellent place to start making plans for a secure financial future.”

When Cooperative Extension was established 90 years ago, it included advisors in “home economics.” Changing times led to a change in the title, but the nutrition, family and consumer sciences advisors efforts to support wise personal economics has not wavered.

The national umbrella organization for Cooperative Extension — the U.S. Department of Agriculture’s Cooperative State Research, Education and Extension Service (CSREES) — has made saving a target issue nationwide.

“The low national savings rate indicates that few people are prepared for later life,” Varcoe said. “People need to be aware that there are things they can do at any income level to prepare for retirement.”

According to the National Retirement Confidence Survey, 58 percent of workers say they are currently saving for retirement, but the amount they have saved is low. The survey found that 45 percent of workers report total household assets, excluding the value of their home, of less than $25,000. Half of American families have less than $1,000 in financial assets. The proportion of workers who say they are currently saving for retirement has remained unchanged since 2001 at about 60 percent.

UCCE would like to see Californians on more secure financial footing. One resource it recommends is a CSREES Web site titled “Financial Security in Later Life.” (http://www.csrees.usda.gov/fsll) The site is designed to give users the skills, confidence and motivation to get started building financial security. It brings together collaborators throughout the country and gives national access to the best personal financial tools they have developed.

For example, the Web site includes an 11-unit home study course on investing, with information on investing in stocks, bonds, annuities, certificates of deposit, individual retirement accounts and retirement plans offered by employers.

“Many people think investing is only for rich people who have a lot of money to invest,” said Patti Wooten Swanson, the UCCE nutrition, family and consumer sciences advisor in San Diego County who has used the curriculum to teach a financial planning course. “In fact, investing is for everyone. This program defines the ‘low dollar amount’ for investing as just $25.”

Another handy tool on the Web site is called “Ballpark Estimate,” which was developed by the American Savings Education Council. (/) Using an online form, consumers can quickly and easily estimate how much they should be saving each month to reach their retirement goal.

A “Late Savers Guide for Retirement” on the Web site is helpful for those who are 15 years or less from retirement. The guide recommends “catch-up” strategies and has suggestions for “finding” money to save for retirement.

Wooten Swanson is also initiating a campaign in San Diego County called “San Diego Saves,” based on the national “America Saves” initiative. (http://america saves.org) UCCE in San Diego and numerous organizations that are part of the San Diego Saves partnership are currently applying for funding to support the program.

“We’re targeting families earning $20,000 to $80,000 a year. We’ve trained motivational speakers to give 30- to 40-minute presentations that will show people how it is possible to begin saving money and why that’s important,” Wooten Swanson said.

The program offers special assistance to those who don’t use banks or credit unions by helping them establish an account with one of 10 financial institutions that have agreed to take part in the San Diego Saves program.

“The banks allow them to open a free or low-cost account with a very small balance to start,” Wooten Swanson said.

Varcoe said American culture has shed the more thrifty nature of baby boomers’ grandparents and adopted a “live for today” mentality. The shift is putting their futures at risk. Even with fully funded Social Security benefits, most will not have enough without personal savings to supplement their incomes.

“People are concerned — finances are right behind health as a major topic they worry about. But they’re not doing enough about it,” Varcoe said. “People are living longer. They need to plan now for when they will no longer work.”

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