BANKING ON A MILLION MANY GEN-XERS AND BABY BOOMERS SAY THEY CAN'T AFFORD TO RETIRE WITH LESS.

Byline: Chris Sieroty Staff Writer

BURBANK - It's no secret: The key to a happy and financially secure retirement is to begin saving early.

Yvette Herrera said that saving for retirement has been a high priority for her and her family for about six years now.

``I think when I first started working I was very unconscious about saving for retirement,'' said Herrera, 36, a marketing executive with PriceWaterhouseCoopers.

``When I found out how important it was and how long it takes to save, I took advantage of opportunities presented to me through work,'' the Burbank resident said. ``Once I opened a 401(k) account through work, then I felt I was taking full advantage of all the benefits I was earning.''

Herrera said she sets aside 15 percent of her salary to go toward her retirement fund.

But, unlike many of her generation, Herrera, considered a Baby Boomer, said she is certain that she'll need a lot more than $1 million before she can retire.

``In terms of today's dollars, a million dollars doesn't sound like a lot of money,'' she said. ``That means I'll have to keep working for a while.''

Meanwhile, a national survey of Baby Boomers and Generation Xers shows that overall, nearly one-third, or 32 percent, expect they will need more than $1 million to be comfortable in retirement.

Generation X has the highest aspirations, according to the survey commissioned by Los Angeles-based Transamerica Retirement Services.

Compared with Boomers' 28 percent, a significantly greater percentage of Gen-Xers, 32 percent, want to have at least $1 million in retirement.

The survey also found that as a sign of changing times, more than 79 percent of people surveyed plan to retire before age 65.

Seventy percent of respondents feel they cannot rely on Social Security for a comfortable retirement. This opinion also is significantly more prevalent among Generation Xers - 80 percent versus 66 percent for Boomers.

``It is our hope that these survey results might cause some employees and employers to take a look at their benefits plans to see if they need a prescription for change,'' said Catherine Collinson, vice president at Transamerica.

Clearly, retirement plans are a popular benefit, and they continue to outweigh compensation as a factor in choosing an employer, said Collinson.

For the second year in a row, 60 percent of those polled indicated that, all things being equal, they would prefer a job that includes a reasonable salary with a great benefits package rather than a job that exceeds their salary requirements but poor retirement benefits.

``We have found that the number of employees looking for good retirement benefits is increasing,'' said Collinson.

Small- to mid-size businesses have a different view. Forty-seven percent of those employers surveyed say better pay is more important to them than benefits.

The survey, conducted by the research firm Comsciences Worldwide, also found:

--Of the respondents who can and do participate in company-sponsored retirement programs, 58 percent are very satisfied with their plans, and 56 percent are very satisfied with their profit sharing plans.

--Sixty-seven percent believe their retirement funds are performing at a level that has kept pace with other financial investments.

--Eighty-eight percent would make additional investments if they found their current plans to be inadequate.

``The Baby Boomers are beginning to contemplate retirement, said Vern Kozlen, executive vice president of Beverly Hills-based City National Investments.

``We are talking to people who think 65 is deemed to be the magical retirement age,'' said Kozlen. ``While many are working past 65, a lot of Baby Boomers are trying to retire before they reach retirement age.''

The survey also revealed some perception gaps, too.

Collinson said while 41 percent of employees believe the lack of a retirement savings plan is because management hasn't considered one, 47 percent of small- to medium-size employers believe their companies cannot finance retirement plans and 49 percent say they are too small.

In reality, only 20 percent of employers surveyed never had considered a retirement plan.

``The urgency behind saving for retirement and the lack of social security has people of all ages taking retirement planning very seriously,'' she said.

``I think Social Security will be around in some form when I retire, but I don't think the amount will be enough to live on,'' said Herrera.

More importantly, Collinson said, ``It's never too late to start saving for retirement.''

However, people can find it difficult to save for retirement because of pressing demands on their finances. Bills, children's nee unexpected expenses add up to make it difficult to save for retirement.

But sometimes it's the little things that count. Imagine what would happen if consumers put some of the money they spend going out to dinner, or drinking coffee toward saving for retirement.

``People need to treat funding their retirement like paying their bills,'' said Darryl Prater, senior regional vice president at Fidelity Investments. ``By setting aside a certain amount each month, you know that you have satisfied your retirement needs.''

``It doesn't take as much as you think,'' said Prater. ``If you set aside $50 per month for the next 30 years, it will grow into $92,244.00.''

The Internet has also become a prominent force in retirement management, with 45 percent of those polled saying managing their funds using the Internet is ``very important.''

Among Generation X, the percentage grows significantly to 59 percent, while only 39 percent of Boomers consider the Internet to be an important fund-management tool.

``In Southern California what we are seeing is that people are beginning to plan and calculate their retirement earlier in life,'' said Kozlen. ``They realize that $500,000 to $1 million is truly insufficient and they are increasing the amount set aside each month.''

Around 85 percent of clients at City National Investments are worried about funding their retirement, he said.

``Taking care of their parents in their retirement has opened Baby Boomer eyes about retiring,'' said Kozlen. ``They are saving more because they want to maintain their lifestyles once they leave the work force.''

As for Gen-Xers, Kozlen said, unlike Baby Boomers, they have had the opportunity to save since the beginning of their working careers.

With additional products and investment education available over the last 15 years, Generation X has no excuse not to save for retirement.

Twenty five years ago, the investment community focused its attention on high-earning individuals, with the middle-class having a hard time buying securities, he said.

Today, with the Internet, discount brokerage firms, mutual funds and 401(k) plans there is no reason for either Baby Boomers or Generation X not to save for their retirement, said Kozlen.

CAPTION(S):

drawing; box

Drawing:

(color) no caption (Piggy Bank)

Reuben J. Stern/Staff Photographer

Box: Pay Yourself