Retirement readiness looks grim in many states

Retirement readiness is grim across much of the country, an analysis released today shows.

Nearly every state comes up short in key areas that gauge retirement readiness: anticipated retirement income, major retirement costs, such as housing and health care, and labor market conditions for older workers.

In terms of retirement readiness in 2012, Wyoming ranks the highest, followed by Alaska, Minnesota and North Dakota.

California, Florida and South Carolina rank among the lowest.

The report, presented at National Institute on Retirement Security's retirement policy conference in Washington, D.C., is designed to be used by policymakers to help identify areas of policy intervention to improve people's retirement prospects.

Every state has its work cut out in one area or another, says the report's lead author, Christian Weller, a professor of public policy at the University of Massachusetts-Boston. When it comes to states addressing retirement issues in the future, "There is no one-size-fits-all," he says.

Institute executive director Diane Oakley said in a statement: "The good news is that some states already are considering policies to reduce future retiree poverty by encouraging workers to save today."

One particularly disturbing finding of the report: Older workers suffered more from higher unemployment and lower wages in lower-ranked states in 2012 than they did in earlier years. This effect may decrease as the labor market for older workers improves with a growing economy, the report says.

Still, Weller says, "Even if the labor market improves, the next recession will surely come, and it would be great to have better labor market policies in place protecting older workers' labor market prospects."

He says, "Surveys typically find that between 70% and 80% of people, when asked what they want to do in retirement, say that they want to work in some form or fashion, such as part-time, starting their own business and volunteering."

Gary Schatsk! y, a New York City financial planner and president of ObjectiveAdvice.com, says, this report "is yet another wake-up call for people to realize that feathering their nest with retirement savings is absolutely essential."

He says people also need to focus on their spending habits and eliminate extraneous spending. They should eliminate high-interest debt and take a hard look at their budgets. People have to take "ownership" that their future is up to them, Schatsky says.

Other key findings:

• All three potential sources of economic insecurity — retirement income, retiree costs and labor markets — for future retirees deserve policy attention.

• There is room for improvement in all states in one or more measures of financial security for future retirees. For example, the highest ranking state for workplace retirement plan participation in 2012 had only 54% of private employees participating in a pension or 401(k). Some people didn't participate, and some didn't have access to either one.

• Improving the future financial security of an aging workforce requires good employment options for older workers. Recessions can have serious longer-term consequences for the economic security of mature adults who have limited time to accumulate additional resources for retirement, the report says.