How Will You Save, America?

My father, a mapmaker for the U.S. Army, had modest means but a keen interest in saving and investing. As a child of the Depression, he would have appreciated National Save for Retirement Week, which runs this week and offers everyone the opportunity to build a better financial future.

As a nation and as individuals we have a lot of work to do.

The worst economic crisis in 70 years showed us that market gains alone don't create financial security. Median houses prices have dropped 20 percent since 2005. At the current rate, the U.S. would need nine more years to capture jobs lost during the recession. The average 401(k) balance is between $60,000 and $70,000 -- nowhere near enough to support 20 to 30 years of retirement.

Job losses and economic insecurity make it tough to think about saving for the future. Compounding the problem is that too often we're on our own when it comes to funding our financial futures.

And the consequences of not saving are profound. Nearly half of Americans say they will have to pare down their goals because they failed to save enough, according to a new TIAA-CREF survey. Moreover, almost two-thirds acknowledge they're not saving enough for the future.

More than 80 percent of Americans want to save more, but are not very well informed or only somewhat informed about what it takes to accomplish that goal.

With that in mind, I encourage people to use the following roadmap as a starting point.

First, explore your options. Does your employer offer a retirement plan or, even better, offer to match the money you put in? Sign up for the plan, and save enough to be eligible for any matching contributions. If you employer doesn't offer a retirement plan, consider an Individual Retirement Plan or Roth IRA to take advantage of tax breaks given to savings.

Next, seek objective advice tailored to your specific needs. While more than three-quarters of Americans rely on themselves to make household financial decisions, more than half of us admit we don't know much about finance. Find an advisor who can help. Also take advantage of financial education opportunities at your job or a local community college. Make sure to ask your advisor about low-fee investments so that your money is going toward your retirement, not your broker's.

Third, spread your money among different types of investments, like stocks, bonds, real estate, and money market accounts. Different types of investments tend to rise and fall at different times. So if one area loses value, your entire portfolio won't suffer.

Fourth, aim to replace the income you earned when you were working so that you'll always have enough money to cover basic needs. The average monthly Social Security payment for retired workers is about $1,600, while average monthly spending for individuals over age 65 exceeds $3,000.

Finally, don't worry if you can't act on all these strategies right now. The most important thing is to start saving. The earlier you begin the more your money can work for you. A 30-year-old saving approximately $250 a month can build a $350,000 nest egg by age 65. A 50-year-old would have to save about $1200 a month to achieve the same goal.

In my family, we were fortunate. While my father had modest means, his attention to saving and investing enabled our family to have a middle-class life.

It's time to get serious about saving, which is essential for realizing our futures. Years from now, let's look back on National Save for Retirement Week as the time when we got started.

Roger W. Ferguson, Jr., a former Vice Chairman of the Federal Reserve, is CEO of TIAA-CREF and a member of the President's Economic Recovery Advisory Board.