Ready to Retire

Given the depth of the credit crisis and the recession, it wouldn’t be surprising to hear that Americans—who have long been viewed as a nation of spenders, not savers—are ill-prepared for retirement. Yet, when it comes to laying the groundwork for a financially secure exit from the workforce, Americans might be doing better than expected.

That is the judgment of Tom Kmak, a retirement expert and chief executive of consultant Fiduciary Benchmarks. Kmak, a veteran of JPMorgan Retirement Plan Services, co-founded Fiduciary Benchmarks in Kansas City in late 2007 to help companies and individuals understand how prepared they are for retirement and how to meet their obligations and goals. Last November, the firm launched its national Retirement Readiness Index. Working with Bdellium, a firm that designs quantitative evaluation systems, Fiduciary Benchmarks studied 21,000 U.S. retirement plans, or almost all plans with more than $10 million in assets. The index includes data covering about 33 million U.S. workers.

Americans have 92 percent of the income that they will need to retire, thanks to a combination of social security, pensions, and 401(k) plans and other savings and investments, according to the index. “When it comes to retirement, Americans are doing better than many people might have expected,” Kmak said.

There’s a wide disparity among different industries and companies, though. And when it comes to preparing for retirement, the most prepared workers aren’t necessarily the highest earners. “People who earn more money tend to spend more money,” Kmak said. And since retirement preparation is a function of replacing compensation with other forms of income, people with higher wages need more resources to maintain their lifestyle. The best-prepared workers tend to be in mature industries with lower wages but richer benefits and conservative workers with a tendency to save.

Support services for agriculture and forestry ranked No. 1. Its workers have 161 percent of the income that they need to retire, thanks to lower wages and thrifty spending habits. They were followed by performing artists and professional athletes, who have 126 percent of what they need. “It looks like Derek Jeter and the boys will be OK,” Kmak says.

What about finance professionals? They are doing fine, with a score of 100, although they are far from the top of the ranking. Truckers have a respectable 81 percent of the money they need for the future. Air transportation workers, in an industry beset with challenges, still have 79 percent readiness.

The workers with the biggest retirement challenges can be found in less mature industries, in which wages may be higher but benefits are more limited. Data processing, hosting, and related workers came in last with a readiness score of only 70 percent. Workers in the heart of the financial markets—securities contracts, commodities, and other financial services—had a score of just 77 percent. That put them just ahead of hospital workers (73 percent) but well behind transportation equipment manufacturers (98 percent.)