Plenty of studies show Americans' retirement resources are lacking. The Employee Benefit Research Institute recently said there is a $4.6 trillion national shortfall in retirement savings to cover basic expenses and health care.
Friday, October 29, 2010
Wednesday, October 27, 2010
Americans Uncertain How to Save for Retirement
http://www.kiplinger.com
Americans' lack of retirement knowledge is reflected in savings data collected by the Employee Benefits Research Institute, a nonprofit research organization. The EBRI, in a report released this week, estimates that the nation's aggregate retirement savings shortfall is more than $4.5 trillion.
That's an average of $47,732 per person (among people aged 36 to 62).
When nursing-home and healthcare expenses are factored in, the shortfall grows even larger, the EBRI notes.
Americans' lack of retirement knowledge is reflected in savings data collected by the Employee Benefits Research Institute, a nonprofit research organization. The EBRI, in a report released this week, estimates that the nation's aggregate retirement savings shortfall is more than $4.5 trillion.
That's an average of $47,732 per person (among people aged 36 to 62).
When nursing-home and healthcare expenses are factored in, the shortfall grows even larger, the EBRI notes.
Nursing Home Costs a Big Factor in Retirement Adequacy Deficit
http://www.consumeraffairs.com
EBRI's analysis finds the aggregate national retirement savings shortfall is $4.6 trillion, for an overall average of $47,732 per individual. The average shortfall varies by age, gender, and marital status.
The Institute says adding nursing home and home health care expense increases the average individual retirement savings shortfall for married households by $25,317. Single males experience an average increase of $32,433, while single females have an increase of $46,425.
"This helps quantify just how large of an impact nursing home and home health care expenses can have on people in retirement," said Jack VanDerhei, EBRI research director and author of the report.
EBRI's estimates are present values (stated in 2010 dollars) at age 65, and represent the additional individual average amount needed at age 65 to eliminate expected deficits in retirement. EBRI notes this aggregate deficit assumed that people will receive current-law Social Security benefits.
EBRI's analysis finds the aggregate national retirement savings shortfall is $4.6 trillion, for an overall average of $47,732 per individual. The average shortfall varies by age, gender, and marital status.
The Institute says adding nursing home and home health care expense increases the average individual retirement savings shortfall for married households by $25,317. Single males experience an average increase of $32,433, while single females have an increase of $46,425.
"This helps quantify just how large of an impact nursing home and home health care expenses can have on people in retirement," said Jack VanDerhei, EBRI research director and author of the report.
EBRI's estimates are present values (stated in 2010 dollars) at age 65, and represent the additional individual average amount needed at age 65 to eliminate expected deficits in retirement. EBRI notes this aggregate deficit assumed that people will receive current-law Social Security benefits.
Retirement Plans Have Shortfalls of $4.6 Trillion, Study Says
http://www.theepochtimes.com/n2/content/view/44618/
Retirement plans possessed by American adults face a collective shortfall of $4.55 trillion, or more than $47,000 per individual, the Employee Benefit Research Institute (EBRI) said in a study published this week.
The numerical amounts represent how much extra money a retiree would have to save or earn than they currently do in order to adequately pay for basic expenses and over-the-top medical expenses for retirement.
The EBRI’s Retirement Security Projection Model, which uses more than a decade of empirical data from 401(k) participants and projects retirement readiness based off of income, plan types, and wealth, noted that some demographics, in general, have higher Retirement Savings Shortfalls (RSS) than others.
EBRI found that households had the lowest RSS, while those with the largest retirement income deficit were single females.
Among different age groups, Generation Xers—those currently in their mid-30s to mid-40s—had a higher RSS than older adults, due to rising health care costs that would be very pricey when they retire.
Retirement plans possessed by American adults face a collective shortfall of $4.55 trillion, or more than $47,000 per individual, the Employee Benefit Research Institute (EBRI) said in a study published this week.
The numerical amounts represent how much extra money a retiree would have to save or earn than they currently do in order to adequately pay for basic expenses and over-the-top medical expenses for retirement.
The EBRI’s Retirement Security Projection Model, which uses more than a decade of empirical data from 401(k) participants and projects retirement readiness based off of income, plan types, and wealth, noted that some demographics, in general, have higher Retirement Savings Shortfalls (RSS) than others.
EBRI found that households had the lowest RSS, while those with the largest retirement income deficit were single females.
Among different age groups, Generation Xers—those currently in their mid-30s to mid-40s—had a higher RSS than older adults, due to rising health care costs that would be very pricey when they retire.
Americans Aren’t Saving Enough for Retirement, Study Finds
economix.blogs.nytimes.com
The typical middle-age American is saving far too little for retirement, and the Employee Benefit Research Institute has estimated the shortfall: an average of $47,732 per individual over the course of that person’s retirement.
The number was intended to show how much additional income future retirees — in this case, people currently 36 to 62 — would need to sufficiently cover basic expenses and uninsured health care costs upon reaching retirement age. (Not all health care costs are covered by Medicare, after all.)
The retirement savings shortfall varies by gender, household size and generation, according to the model used by the institute, which is a nonpartisan research organization.
For example, Generation Xers — that is, people born from 1965 to 1974 — have a higher estimated retirement shortfall for any given household type. That is primarily because health care costs are rising so quickly, and will be especially expensive by the time that generation retires.
The costs of nursing home and home health care expenses increase the average retirement shortfall by $25,317 for married households (whose inhabitants can pool expenses). The shortfall for single men increases an average of $32,433, and for single women the average increase is $46,425.
The typical middle-age American is saving far too little for retirement, and the Employee Benefit Research Institute has estimated the shortfall: an average of $47,732 per individual over the course of that person’s retirement.
The number was intended to show how much additional income future retirees — in this case, people currently 36 to 62 — would need to sufficiently cover basic expenses and uninsured health care costs upon reaching retirement age. (Not all health care costs are covered by Medicare, after all.)
The retirement savings shortfall varies by gender, household size and generation, according to the model used by the institute, which is a nonpartisan research organization.
For example, Generation Xers — that is, people born from 1965 to 1974 — have a higher estimated retirement shortfall for any given household type. That is primarily because health care costs are rising so quickly, and will be especially expensive by the time that generation retires.
The costs of nursing home and home health care expenses increase the average retirement shortfall by $25,317 for married households (whose inhabitants can pool expenses). The shortfall for single men increases an average of $32,433, and for single women the average increase is $46,425.
Home Healthcare and Nursing-Home Costs Add to Retirement Burden
kiplinger.com
Already, the Employee Benefits Research Institute says, Americans are facing a severe retirement-savings shortfall - a situation that's made even direr when nursing-home and home healthcare costs are added to the mix.
The average savings shortfall for people between the ages of 36 and 62 is nearly $47,000. That estimate doesn't take into account the costs of nursing-home care or home-health services, however.
The average married couple would need to save $25,317 more to account for those expenses. Single people face an even greater burden: For single men, the shortfall is $32,433; for single women, it's $46,425.
Already, the Employee Benefits Research Institute says, Americans are facing a severe retirement-savings shortfall - a situation that's made even direr when nursing-home and home healthcare costs are added to the mix.
The average savings shortfall for people between the ages of 36 and 62 is nearly $47,000. That estimate doesn't take into account the costs of nursing-home care or home-health services, however.
The average married couple would need to save $25,317 more to account for those expenses. Single people face an even greater burden: For single men, the shortfall is $32,433; for single women, it's $46,425.
Americans face retirement savings deficits of nearly $48,000 per person, on average, nonprofit group finds
mcknights.com
A nonpartisan group estimates that the average retirement savings shortfall is $47,732 per person, or $4.6 trillion nationally.
Home-health care and nursing home costs can double both figures. Meanwhile, the elimination of Social Security benefits could drive those estimates to $89,000 per individual, or $8.5 trillion nationally, according to the Employee Benefit Research Institute. The institute used its own Retirement Security Projection Model to estimate the deficits at age 65 for three categories of workers: early boomers, late boomers and Generation Xers, according to ConsumerAffairs.com.
The totals vary by age, gender and marital status, but the values are based on 2010 dollars and for individuals who are 65. EBRI researchers said the numbers help individuals and care providers quantify the cost impact of home-health care and nursing homes on people in retirement.
A nonpartisan group estimates that the average retirement savings shortfall is $47,732 per person, or $4.6 trillion nationally.
Home-health care and nursing home costs can double both figures. Meanwhile, the elimination of Social Security benefits could drive those estimates to $89,000 per individual, or $8.5 trillion nationally, according to the Employee Benefit Research Institute. The institute used its own Retirement Security Projection Model to estimate the deficits at age 65 for three categories of workers: early boomers, late boomers and Generation Xers, according to ConsumerAffairs.com.
The totals vary by age, gender and marital status, but the values are based on 2010 dollars and for individuals who are 65. EBRI researchers said the numbers help individuals and care providers quantify the cost impact of home-health care and nursing homes on people in retirement.
Retirement income deficit would double without Social Security benefits, EBRI finds
CCH
The total aggregate national deficit in U.S. retirement income adequacy is an estimated $4.6 trillion—or about an average of $48,000 per individual, according to congressional testimony by the nonpartisan Employee Benefit Research Institute (EBRI). Reflecting the importance of Social Security, EBRI's analysis finds that if Social Security retirement benefits were eliminated, the aggregate retirement income deficit would almost double—to $8.5 trillion, or an individual average of approximately $89,000.
The estimates are present values (stated in 2010 dollars) at age 65, and represent the additional individual average amount needed at age 65 to eliminate expected deficits in retirement. EBRI notes this aggregate deficit assumed that Americans will receive current-law Social Security benefits.
"These numbers show that the national retirement income deficit—which is already quite large—would almost double without current-level Social Security benefits," said Jack VanDerhei, EBRI research director, testifying at a hearing by the Senate Committee on Health, Education, Labor and Pensions. His full testimony is on EBRI’s website.
The total aggregate national deficit in U.S. retirement income adequacy is an estimated $4.6 trillion—or about an average of $48,000 per individual, according to congressional testimony by the nonpartisan Employee Benefit Research Institute (EBRI). Reflecting the importance of Social Security, EBRI's analysis finds that if Social Security retirement benefits were eliminated, the aggregate retirement income deficit would almost double—to $8.5 trillion, or an individual average of approximately $89,000.
The estimates are present values (stated in 2010 dollars) at age 65, and represent the additional individual average amount needed at age 65 to eliminate expected deficits in retirement. EBRI notes this aggregate deficit assumed that Americans will receive current-law Social Security benefits.
"These numbers show that the national retirement income deficit—which is already quite large—would almost double without current-level Social Security benefits," said Jack VanDerhei, EBRI research director, testifying at a hearing by the Senate Committee on Health, Education, Labor and Pensions. His full testimony is on EBRI’s website.
Tuesday, October 12, 2010
Retirement 'Deficit' Measured in Trillions
thestreet
The financial gap between what Americans need for retirement and what they have is $4.6 trillion as a national aggregate and an average $48,000 per person, according to congressional testimony by the Employee Benefit Research Institute.
Jack VanDerhei, EBRI's research director, was among those testifying at a hearing Thursday, The Wobbly Stool: Retirement (In)security in America, convened by the Senate Committee on Health, Education and Labor. Testimony and video of the hearing on U.S. retirement income adequacy is available online.
The financial gap between what Americans need for retirement and what they have is $4.6 trillion as a national aggregate and an average $48,000 per person, according to congressional testimony by the Employee Benefit Research Institute.
Jack VanDerhei, EBRI's research director, was among those testifying at a hearing Thursday, The Wobbly Stool: Retirement (In)security in America, convened by the Senate Committee on Health, Education and Labor. Testimony and video of the hearing on U.S. retirement income adequacy is available online.
EBRI is a research institute based in Washington, D.C., that focuses on retirement and economic security issues. Its analysis estimates how much money will be needed for "basic" expenses (such as food and shelter) and uninsured health care costs in retirement, and what financial resources retirees are likely to have.
The deficit projection assumes no changes to the current Social Security benefit structure. If Social Security benefits were to be eliminated, the aggregate deficit would jump to $8.5 trillion and the average amount would increase to about $89,000.
Friday, October 8, 2010
The National Retirement Income Adequacy Deficit: $4.6 Trillion
The total aggregate national deficit in U.S. retirement income adequacy is an estimated $4.6 trillion—or about $48,000 per-individual average, according to congressional testimony by the nonpartisan Employee Benefit Research Institute (EBRI).
Reflecting the importance of Social Security, the EBRI analysis finds that if Social Security retirement benefits were eliminated, the aggregate retirement income deficit would almost double, to $8.5 trillion, or an individual average of approximately $89,000.
"These numbers show that the national retirement income deficit—which is already quite large—would almost double without current-level Social Security benefits,” said Jack VanDerhei, EBRI research director, testifying at a hearing Oct. 7 by the Senate Committee on Health, Education, Labor and Pensions. The Senate HELP Committee’s website for the hearing is online here.
America's $4.6 trillion retirement hole
money.cnn.com
On average, U.S. workers would need to have an additional $48,000 when they retire at 65 to ensure they don't run shy of cash in retirement, the Employee Benefit Research Institute said.
All told, the group estimates that the national retirement deficit is $4.6 trillion.
The research group estimated how much money retirees will need for "basic" expenses such as food, shelter and uninsured health care costs. It compared those expenses to the financial resources workers are likely to have at the typical retirement age, including Social Security, pensions and savings plans such as 401(k)s.
If Social Security benefits are deducted, the group estimates that the national retirement deficit would jump to $8.5 trillion, or about $89,000 for the average worker.
In all cases, low-income workers are most at risk of not having enough savings to retire on, Jack VanDerhei, research director at EBRI, told lawmakers Thursday. EBRI estimates that 41% of low-income Baby Boomers will run short of money within 10 years of retirement.
However, he noted that the number of households that are projected to have inadequate retirement income has declined since the last time EBRI studied the topic in 2003.
VanDerhei said the improvement over the last seven years is largely due to an increase in the number of employers that automatically enroll workers in 401(k) plans.
Automatic enrollment, which allows workers to opt out, can increase participation in retirement savings plans dramatically, he said, particularly among lower-income employees.
Thursday, September 16, 2010
Retirement Readiness: Can Employers Do More?
Workforce
EBRI’s Retirement Readiness Rating examined retirement preparedness levels by age and income and found that no group is completely prepared. Nearly half (47 percent) of early boomers, people ages 56 to 62, won’t have enough for regular living expenses and uninsured health care costs. Nearly two-thirds (64 percent) of Americans in the two lowest pre-retirement income levels will likely exhaust retirement savings after 10 years.
While higher-income workers fare better, 5 percent may run out of cash after 10 years, and 13 percent may run out after 20 years of retirement, the study says.
“We have to do more than worry about whether people are saving; we have to worry about whether they are saving enough,” says Jack VanDerhei, EBRI’s research director.
The study, which was last conducted in 2003, took into account new pension funding trends including an increased number of defined-contribution plans (versus defined-benefit plans), automatic enrollment and automatic escalation of employee deferrals. (Under automatic escalation, the employee’s contributions are increased unless the employee specifically intervenes to halt the escalation.) People were considered to be at risk if their projected savings fell below a combination of certain estimated spending levels, including the Bureau of Labor Statistics’ Consumer Expenditure Survey.
Compared with 2003, Americans are saving more today, lowering risk levels. That year, early boomers had a 59 percent chance of being at risk, versus 47 percent today; late boomers, ages 46 to 55, had a 54 percent change of being classified as at risk in 2003, versus 43 percent now. With the growing trend of plan sponsors moving from defined-benefit plans to defined-contribution plans, the higher savings rate does show that 401(k) plans can work, VanDerhei says.
EBRI’s Retirement Readiness Rating examined retirement preparedness levels by age and income and found that no group is completely prepared. Nearly half (47 percent) of early boomers, people ages 56 to 62, won’t have enough for regular living expenses and uninsured health care costs. Nearly two-thirds (64 percent) of Americans in the two lowest pre-retirement income levels will likely exhaust retirement savings after 10 years.
While higher-income workers fare better, 5 percent may run out of cash after 10 years, and 13 percent may run out after 20 years of retirement, the study says.
“We have to do more than worry about whether people are saving; we have to worry about whether they are saving enough,” says Jack VanDerhei, EBRI’s research director.
The study, which was last conducted in 2003, took into account new pension funding trends including an increased number of defined-contribution plans (versus defined-benefit plans), automatic enrollment and automatic escalation of employee deferrals. (Under automatic escalation, the employee’s contributions are increased unless the employee specifically intervenes to halt the escalation.) People were considered to be at risk if their projected savings fell below a combination of certain estimated spending levels, including the Bureau of Labor Statistics’ Consumer Expenditure Survey.
Compared with 2003, Americans are saving more today, lowering risk levels. That year, early boomers had a 59 percent chance of being at risk, versus 47 percent today; late boomers, ages 46 to 55, had a 54 percent change of being classified as at risk in 2003, versus 43 percent now. With the growing trend of plan sponsors moving from defined-benefit plans to defined-contribution plans, the higher savings rate does show that 401(k) plans can work, VanDerhei says.
Monday, August 16, 2010
WSJ: Another Threat to Economy: Boomers Cutting Back
WSJ
Low yields present retirees with a difficult choice: Accept the lower income offered by safer bonds, or take the risk of staying in the stock market. Either way, their predicament could put a long-term damper on the consumer spending that typically drives U.S. growth.
"If these rates stay as low as they are, then a lot more people are going to be hurting," says Jack VanDerhei, research director at the Employee Benefit Research Institute. The non-partisan outfit estimates that if current conditions persist, nearly three in five baby boomers will be at risk of running short of money in retirement. "There are going to be many luxury items that will simply have to be eliminated," for retirees to make ends meet.
...
At the same time, the return people can hope to earn on their assets has fallen, particularly for those who switch into bonds or annuities to guarantee a fixed income. The average yield on U.S. government, corporate and mortgage bonds stands at about 2.4%, while stock-market valuations suggest a long-term return of about 6%. At those levels of return, some 59% of people aged 56 to 62 will be at risk of not having enough money to cover basic living and health-care costs in retirement, estimates Mr. VanDerhei. If market returns are higher—8.9% for stocks and 6.3% for bonds—the picture isn't a lot better: The percentage at risk falls to about 47%.
Low yields present retirees with a difficult choice: Accept the lower income offered by safer bonds, or take the risk of staying in the stock market. Either way, their predicament could put a long-term damper on the consumer spending that typically drives U.S. growth.
"If these rates stay as low as they are, then a lot more people are going to be hurting," says Jack VanDerhei, research director at the Employee Benefit Research Institute. The non-partisan outfit estimates that if current conditions persist, nearly three in five baby boomers will be at risk of running short of money in retirement. "There are going to be many luxury items that will simply have to be eliminated," for retirees to make ends meet.
...
At the same time, the return people can hope to earn on their assets has fallen, particularly for those who switch into bonds or annuities to guarantee a fixed income. The average yield on U.S. government, corporate and mortgage bonds stands at about 2.4%, while stock-market valuations suggest a long-term return of about 6%. At those levels of return, some 59% of people aged 56 to 62 will be at risk of not having enough money to cover basic living and health-care costs in retirement, estimates Mr. VanDerhei. If market returns are higher—8.9% for stocks and 6.3% for bonds—the picture isn't a lot better: The percentage at risk falls to about 47%.
Tuesday, August 10, 2010
USAT: Boomers wanting to work past retirement age find limited options
USA Today
Nearly half of Baby Boomers ages 56 to 62 are at risk of not having enough savings for basic expenses and uninsured medical bills, according to Employee Benefit Research Institute's new Retirement Readiness Rating. And 41% of the lowest-income older Boomers .... are likely to run short of money after 10 years of retirement.
Monday, August 9, 2010
Health care, variable payouts factor into retirement puzzle
Rockford Register Star
The EBRI study, last done in 2003, evaluated national retirement income adequacy based on a database of 24 million 401(k) participants. The newest version takes into account many new retirement plan changes, such as auto-enrollment and auto-escalation of contributions in 401(k) plans, as well as updates on the financial market and employee behavior.
The EBRI study, last done in 2003, evaluated national retirement income adequacy based on a database of 24 million 401(k) participants. The newest version takes into account many new retirement plan changes, such as auto-enrollment and auto-escalation of contributions in 401(k) plans, as well as updates on the financial market and employee behavior.
Thursday, July 29, 2010
Chicago Trib: Calculating how much you need for retirement
http://www.chicagotribune.com
It's a shocking statistic: About 47 percent of early baby boomers and 44.5 percent of Generation Xers — age 36 to 45 — are on course to run short of money for basic living expenses like food and electricity in retirement, according to the Employee Benefit Research Institute.
It's a shocking statistic: About 47 percent of early baby boomers and 44.5 percent of Generation Xers — age 36 to 45 — are on course to run short of money for basic living expenses like food and electricity in retirement, according to the Employee Benefit Research Institute.
Monday, July 26, 2010
Good News and Bad News
hreonline
The Employee Benefit Research Institute's EBRIRetirement Readiness Rating, released July 13, finds about two-thirds (64 percent) of Americans in the two lowest preretirement income levels will be running short after 10 years in retirement.
Moreover, after 20 years of retirement, one-third (29 percent) of those in the next-to-the-highest income level will run short of money, as will more than 1 in 10 (13 percent) of those in the highest income level.
The findings have created enough alarm in the business community and the media that the study became the subject of a recent NBC Today Show discussion between show host Matt Lauer and Jean Chatzky, NBC's financial editor.
The Employee Benefit Research Institute's EBRIRetirement Readiness Rating, released July 13, finds about two-thirds (64 percent) of Americans in the two lowest preretirement income levels will be running short after 10 years in retirement.
Moreover, after 20 years of retirement, one-third (29 percent) of those in the next-to-the-highest income level will run short of money, as will more than 1 in 10 (13 percent) of those in the highest income level.
The findings have created enough alarm in the business community and the media that the study became the subject of a recent NBC Today Show discussion between show host Matt Lauer and Jean Chatzky, NBC's financial editor.
Sunday, July 25, 2010
NY Post: Retirement woes
http://www.nypost.com
Even the seemingly well off may find they are struggling to make ends meet in the so-called golden years.
They could begin their retirement with what appears to be a healthy nest egg, only to run out of money years later, and needing to return to work.
That's one conclusion of a recent report by a Washington-based retirement institute. The Employee Benefits Research Institute (EBRI) warns that millions of Americans who think they are well-prepared for retirement are "likely" to have insufficient assets for all their years in retirement. That's because they didn't save or insure themselves enough or haven't calculated the many ways their retirement plan could fail.
Even the seemingly well off may find they are struggling to make ends meet in the so-called golden years.
They could begin their retirement with what appears to be a healthy nest egg, only to run out of money years later, and needing to return to work.
That's one conclusion of a recent report by a Washington-based retirement institute. The Employee Benefits Research Institute (EBRI) warns that millions of Americans who think they are well-prepared for retirement are "likely" to have insufficient assets for all their years in retirement. That's because they didn't save or insure themselves enough or haven't calculated the many ways their retirement plan could fail.
Friday, July 23, 2010
Will You Run Out of Money?
http://www.secondact.com/2010/07/will-you-run-out-of-money-before-you-run-out-of-years/
A new report by one of the nation's most respected retirement research groups confirms the worst fears of pre-retirement Americans: Many of us are on track to run out of money before we run out of years to live.
That's the top-line finding of the 2010 Retirement Readiness Rating from the Employee Benefit Research Institute (EBRI). The report projects future retirement readiness each year by crunching actual performance data from 24 million actual 401(k) plan participants. EBRI defines "running short of money" as households that won't have enough cash to meet basic expenses or to meet projected uncovered home health care or nursing home expenses.
A new report by one of the nation's most respected retirement research groups confirms the worst fears of pre-retirement Americans: Many of us are on track to run out of money before we run out of years to live.
That's the top-line finding of the 2010 Retirement Readiness Rating from the Employee Benefit Research Institute (EBRI). The report projects future retirement readiness each year by crunching actual performance data from 24 million actual 401(k) plan participants. EBRI defines "running short of money" as households that won't have enough cash to meet basic expenses or to meet projected uncovered home health care or nursing home expenses.
Wednesday, July 21, 2010
Moneywatch: Read This and Improve Your Odds of Retiring
http://moneywatch.bnet.com
A few weeks ago the Employee Benefit Research Institute released a study on retirement preparedness for baby boomers and Gen Xers. Not surprisingly, about half of the people surveyed probably won’t have enough assets to pay for their basic living expenses in retirement.
A few weeks ago the Employee Benefit Research Institute released a study on retirement preparedness for baby boomers and Gen Xers. Not surprisingly, about half of the people surveyed probably won’t have enough assets to pay for their basic living expenses in retirement.
Retirement will be risky for many Americans, study says
http://www.stltoday.com
More than 40 percent of Americans are at risk of having too little retirement income, a new study by the Employee Benefit Research Institute says.
What's more, the oldest workers are the least prepared to quit working. The EBRI says that 47% of early Baby Boomers are at risk of running out of money in retirement, compared with 44.5 percent of Generation Xers.
For some people, retirement savings won't last very long at all. Among the lowest-income quarter of the working population, 41 percent will be short of money after a mere 10 years in retirement.
More than 40 percent of Americans are at risk of having too little retirement income, a new study by the Employee Benefit Research Institute says.
What's more, the oldest workers are the least prepared to quit working. The EBRI says that 47% of early Baby Boomers are at risk of running out of money in retirement, compared with 44.5 percent of Generation Xers.
For some people, retirement savings won't last very long at all. Among the lowest-income quarter of the working population, 41 percent will be short of money after a mere 10 years in retirement.
Tuesday, July 20, 2010
Thursday, July 15, 2010
Marketwatch: Retirement may mean a lifestyle downgrade
Marketwatch
If you're a baby boomer, the odds are high you'll exhaust your retirement savings after 10 or 20 years of retirement, according to the latest Retirement Readiness Rating report released this week by the Employee Benefit Research Institute.
If you're a baby boomer, the odds are high you'll exhaust your retirement savings after 10 or 20 years of retirement, according to the latest Retirement Readiness Rating report released this week by the Employee Benefit Research Institute.
WP: The scary state of retirement savings
http://www.washingtonpost.com
The nonpartisan Employee Benefit Research Institute regularly delivers the dreadful news of how unprepared so many Americans are for retirement. The findings give you a chill, much like seeing an image of the iconic black-robed, scythe-carrying personification of death.
But that chill is needed. Washington-based EBRI continues to be at the forefront of sounding the alarm that we ought to be more aggressive in preventing people from falling into poverty in their senior years.
In 2003, the institute developed its trademark "Retirement Readiness Rating" to assess retirement-income prospects for American workers. The 2010 findings, released this week, show that a large percentage of people, including high earners, are likely to run out of money 10 to 20 years into retirement.
The nonpartisan Employee Benefit Research Institute regularly delivers the dreadful news of how unprepared so many Americans are for retirement. The findings give you a chill, much like seeing an image of the iconic black-robed, scythe-carrying personification of death.
But that chill is needed. Washington-based EBRI continues to be at the forefront of sounding the alarm that we ought to be more aggressive in preventing people from falling into poverty in their senior years.
In 2003, the institute developed its trademark "Retirement Readiness Rating" to assess retirement-income prospects for American workers. The 2010 findings, released this week, show that a large percentage of people, including high earners, are likely to run out of money 10 to 20 years into retirement.
Even Wealthy Face Retirement Shortfall
http://www.thestreet.com
For those stressed out by the prospect they may not have enough money saved for retirement, a study released this week by the Employee Benefit Research Institute will be of little comfort.
The study, based on an analysis of 24 million participants in 401(k) plans, is touted as the first time a national retirement model has projected when different groups, based on age and income, are likely to exhaust their retirement savings. The conclusion: "Dramatically high percentages of Americans -- even in the upper-income categories -- are likely to run short of money after 10 or 20 years of retirement."
"Policy makers need to understand what percentage of the population is likely to fail to achieve retirement security under current conditions," says Jack VanDerhei, principal author of the study. "Even more important is to identify which of those households still have time to modify their behavior to achieve retirement security, and how they need to proceed."
For those stressed out by the prospect they may not have enough money saved for retirement, a study released this week by the Employee Benefit Research Institute will be of little comfort.
The study, based on an analysis of 24 million participants in 401(k) plans, is touted as the first time a national retirement model has projected when different groups, based on age and income, are likely to exhaust their retirement savings. The conclusion: "Dramatically high percentages of Americans -- even in the upper-income categories -- are likely to run short of money after 10 or 20 years of retirement."
"Policy makers need to understand what percentage of the population is likely to fail to achieve retirement security under current conditions," says Jack VanDerhei, principal author of the study. "Even more important is to identify which of those households still have time to modify their behavior to achieve retirement security, and how they need to proceed."
Wednesday, July 14, 2010
Money/CNN: 47% of early boomers could run shy of cash
money.cnn.com
Many early baby boomers may have a hard time making ends meet in retirement, according to a new study.
The Employee Benefit Research Institute estimates that 47% of boomers between the ages of 56 and 62 are likely to run shy of the cash they'll need to pay for basic expenses and uninsured health costs in retirement.
On the bright side, that's down from the estimate seven years ago. In 2003, 59% of early boomers ran the risk of running short of money in retirement. What's the difference between now and then? Much broader use of policies governing work-based retirement plans, such as automatic enrollment in 401(k) plans and automatic increases to 401(k) contributions.
"This makes a huge difference, especially for low-income workers," said the study's coauthor, Jack Vanderhei, who is EBRI's research director.
Many early baby boomers may have a hard time making ends meet in retirement, according to a new study.
The Employee Benefit Research Institute estimates that 47% of boomers between the ages of 56 and 62 are likely to run shy of the cash they'll need to pay for basic expenses and uninsured health costs in retirement.
On the bright side, that's down from the estimate seven years ago. In 2003, 59% of early boomers ran the risk of running short of money in retirement. What's the difference between now and then? Much broader use of policies governing work-based retirement plans, such as automatic enrollment in 401(k) plans and automatic increases to 401(k) contributions.
"This makes a huge difference, especially for low-income workers," said the study's coauthor, Jack Vanderhei, who is EBRI's research director.
USA Today: Many workers' retirement savings will run out too soon
www.usatoday.com
A third of middle-income workers will likely run out of money after 20 years of retirement, and significantly more lower-income workers will deplete their savings after 10 years, according to a study released Tuesday.
The Employee Benefit Research Institute, a non-partisan research group based in Washington, said its retirement-readiness study found that living longer, saving too little and inadequate planning for health care costs will leave many retirees short of money to pay basic living expenses.
A third of middle-income workers will likely run out of money after 20 years of retirement, and significantly more lower-income workers will deplete their savings after 10 years, according to a study released Tuesday.
The Employee Benefit Research Institute, a non-partisan research group based in Washington, said its retirement-readiness study found that living longer, saving too little and inadequate planning for health care costs will leave many retirees short of money to pay basic living expenses.
USNEWS: Automatic 401(k)s Aid Retirement Readiness
http://money.usnews.com
People are more prepared for retirement than they were seven years ago, according to a recent study by the Employee Benefits Research Institute (EBRI), one of the major think tanks in the retirement space. EBRI compared its 2010 Retirement Readiness Rating with a similar rating it did in 2003. While anywhere from 43 to 47 percent of adults aged 36 to 62 are at risk of not having enough money for retirement, the comparable percentages in 2003 ranged from nearly 55 to 59 percent. The main cause of the improvement, EBRI said, was the 2006 Pension Protection Act, which requires the automatic enrollment of employees in 401(k) plans unless they opt out of the programs.
People are more prepared for retirement than they were seven years ago, according to a recent study by the Employee Benefits Research Institute (EBRI), one of the major think tanks in the retirement space. EBRI compared its 2010 Retirement Readiness Rating with a similar rating it did in 2003. While anywhere from 43 to 47 percent of adults aged 36 to 62 are at risk of not having enough money for retirement, the comparable percentages in 2003 ranged from nearly 55 to 59 percent. The main cause of the improvement, EBRI said, was the 2006 Pension Protection Act, which requires the automatic enrollment of employees in 401(k) plans unless they opt out of the programs.
Study: Americans better prepared for retirement
http://weblogs.baltimoresun.com
The latest "retirement readiness" study from the Employee Benefit Research Institute got a lot of coverage yesterday, The bad news justifiably got most of the press. Many, many Americans aren't saving enough for retirement. But there was some (relative) good news buried in the report. The portion of boomers and GenXers "at risk" of using up their retirement resources is generally lower than it was in 2003, when EBRI did a previous study.
The latest "retirement readiness" study from the Employee Benefit Research Institute got a lot of coverage yesterday, The bad news justifiably got most of the press. Many, many Americans aren't saving enough for retirement. But there was some (relative) good news buried in the report. The portion of boomers and GenXers "at risk" of using up their retirement resources is generally lower than it was in 2003, when EBRI did a previous study.
Reuters: Many Americans will run short in retirement: study
http://www.reuters.com
No matter their income level, a significant number of U.S. workers are likely to struggle to meet basic expenses during retirement, a new study of baby boomers and "generation Xers" released on Tuesday shows.
Over 40 percent of people with the lowest incomes face prospects of depleted savings within 10 years after retirement, with that number climbing toward 60 percent after another decade, according to Washington-based Employee Benefit Research Institute (EBRI).
For many workers, having savings in a 401(k) plan or similar retirement vehicle can make the difference between security and struggle in retirement.
"How long you've been in a 401(k) plan is the number one thing showing if you'll have enough retirement income," Jack VanDerhei, EBRI's research director, told Reuters.
No matter their income level, a significant number of U.S. workers are likely to struggle to meet basic expenses during retirement, a new study of baby boomers and "generation Xers" released on Tuesday shows.
Over 40 percent of people with the lowest incomes face prospects of depleted savings within 10 years after retirement, with that number climbing toward 60 percent after another decade, according to Washington-based Employee Benefit Research Institute (EBRI).
For many workers, having savings in a 401(k) plan or similar retirement vehicle can make the difference between security and struggle in retirement.
"How long you've been in a 401(k) plan is the number one thing showing if you'll have enough retirement income," Jack VanDerhei, EBRI's research director, told Reuters.
Jean Chatzky: Are you ready to retire? Make sure you've saved enough
By Jean Chatzky
Will you run out of money in retirement? New research from the Employee Benefits Research Institute shows that even for well-earning Baby Boomers and Generation Xers, there's nearly a 50% chance that will happen.
According to the research, 41% of people in the lowest 25% of American earners ($0 -- $11,700 a year) were likely to run short of money after 10 years in retirement, and 57% after 20 years. Those percentages continued to shrink as earnings increased, but 5% of the highest 25% of American earners ($72,000 and up) are likely to run short of money after 10 years in retirement and 13% after 20 years. That seems especially troubling on a day that Willard Scott wished happy birthday to a 114-year old and 110-year old in succession.
And it means that nearly half of Boomers and Xers are not going to have enough money during their retirement to pay for the basics, let alone the added health care expenses that can run six figures or more, explains EBRI's Jack VanDerhei.
If there's a solution it lies elsewhere in the research. Automatically enrolling workers into 401(k) and other defined contribution plans seems to be one way to get them to save more. The passage of the Pension Protection Act in 2006, brought down the barriers for those employers who wanted to auto-enroll people into their retirement plans, says VanDerhei. It's been hugely successful. In companies that have automatic enrollment, 80% to 90% of people are in the company retirement plan. In companies that don't have it, half that many people are in. And 401(k) participation reduces the risk of running out of money to 20%. That, says VanDerhei, is significant.
Will you run out of money in retirement? New research from the Employee Benefits Research Institute shows that even for well-earning Baby Boomers and Generation Xers, there's nearly a 50% chance that will happen.
According to the research, 41% of people in the lowest 25% of American earners ($0 -- $11,700 a year) were likely to run short of money after 10 years in retirement, and 57% after 20 years. Those percentages continued to shrink as earnings increased, but 5% of the highest 25% of American earners ($72,000 and up) are likely to run short of money after 10 years in retirement and 13% after 20 years. That seems especially troubling on a day that Willard Scott wished happy birthday to a 114-year old and 110-year old in succession.
And it means that nearly half of Boomers and Xers are not going to have enough money during their retirement to pay for the basics, let alone the added health care expenses that can run six figures or more, explains EBRI's Jack VanDerhei.
If there's a solution it lies elsewhere in the research. Automatically enrolling workers into 401(k) and other defined contribution plans seems to be one way to get them to save more. The passage of the Pension Protection Act in 2006, brought down the barriers for those employers who wanted to auto-enroll people into their retirement plans, says VanDerhei. It's been hugely successful. In companies that have automatic enrollment, 80% to 90% of people are in the company retirement plan. In companies that don't have it, half that many people are in. And 401(k) participation reduces the risk of running out of money to 20%. That, says VanDerhei, is significant.
Tuesday, July 13, 2010
WSJ: Retirement Security Brighter
http://online.wsj.com
Retirement plans are doing a better job of providing a secure retirement for workers than a decade ago, according to a study to be released Tuesday by a nonpartisan research group. Many workers, however, may still come up short.
That news of improved security may seem counterintuitive—or just plain wrong—to workers who saw their retirement accounts shrink during the recent market downturn.
The improvement is thanks largely to a recent increase in automatic employee enrollment in 401(k) retirement plans, says Jack VanDerhei, lead researcher on the report.
"Things are getting better" since the EBRI's first study about retirement risk, published in 2003, Mr. VanDerhei said. "But there is still a very large percentage of households and workers who are likely to be at risk for retirement income" insecurity.
Nearly half—47.2%—of households whose oldest members are age 56 to 62 are at risk of not having enough retirement income to pay for basic expenditures and uninsured health-care costs in retirement, according to the study. That is better than the 59.2% of households who were projected to run short on retirement income in EBRI's 2003 study.
Retirement plans are doing a better job of providing a secure retirement for workers than a decade ago, according to a study to be released Tuesday by a nonpartisan research group. Many workers, however, may still come up short.
That news of improved security may seem counterintuitive—or just plain wrong—to workers who saw their retirement accounts shrink during the recent market downturn.
The improvement is thanks largely to a recent increase in automatic employee enrollment in 401(k) retirement plans, says Jack VanDerhei, lead researcher on the report.
"Things are getting better" since the EBRI's first study about retirement risk, published in 2003, Mr. VanDerhei said. "But there is still a very large percentage of households and workers who are likely to be at risk for retirement income" insecurity.
Nearly half—47.2%—of households whose oldest members are age 56 to 62 are at risk of not having enough retirement income to pay for basic expenditures and uninsured health-care costs in retirement, according to the study. That is better than the 59.2% of households who were projected to run short on retirement income in EBRI's 2003 study.
Chicago Trib: Nearly half of those nearing retirement lack adequate savings
http://www.chicagotribune.com
The people in the best shape with savings tend to have 401(k) plans, said VanDerhei. With such plans, people save regularly, while people who must go on their own to a broker or mutual fund company to start an IRA tend to procrastinate.
Changes in government regulations during the last few years have been encouraging employers to enroll employees in 401(k) plans automatically without asking for permission, and that has prepared people better for their future, said VanDerhei.
CS Monitor: Report sounds alarm bell over Americans' retirement plan
http://www.csmonitor.com
The study was conducted by the nonpartisan Employee Benefit Research Institute (EBRI) in Washington. Although the detailed study suggests a significant financial challenge lies ahead, the findings are not entirely grim.
Many workers still have time to bolster their financial position. The study estimates that for a middle-income Gen Xer, saving about 5 percent more of income could make the difference between falling short and being secure in retirement
The study was conducted by the nonpartisan Employee Benefit Research Institute (EBRI) in Washington. Although the detailed study suggests a significant financial challenge lies ahead, the findings are not entirely grim.
Many workers still have time to bolster their financial position. The study estimates that for a middle-income Gen Xer, saving about 5 percent more of income could make the difference between falling short and being secure in retirement
The EBRI Retirement Readiness Rating:™ Retirement Income Preparation and Future Prospects
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Executive Summary
MODELING RETIREMENT INCOME ADEQUACY: The EBRI Retirement Readiness Rating™ was developed in 2003 to provide assessment of national retirement income prospects. The 2010 update uses the most recent data and considers retirement plan changes (e.g., automatic enrollment, auto escalation of contributions, and diversified default investments resulting from the Pension Protection Act of 2006) as well as updates for financial market performance and employee behavior (based on a database of 24 million 401(k) participants).
“AT RISK” LEVELS, BY AGE AND INCOME: The baseline 2010 Retirement Readiness Rating™ finds that nearly one-half (47.2 percent) of the oldest cohort (Early Baby Boomers) are simulated to be “at risk” of not having sufficient retirement resources to pay for “basic” retirement expenditures and uninsured health care costs. The percentage “at risk” drops for the Late Boomers (to 43.7 percent) but then increases slightly for Generation Xers to 44.5 percent. Households in the lowest one-third when ranked by preretirement income are simulated to be “at risk” 70.3 percent of the time, while the middle-income group has an “at-risk” level of 41.6 percent. This figure drops to 23.3 percent for the highest-income group. These numbers are generally much more optimistic than those simulated for the same groups seven years earlier. In 2003, 59.2 percent of the Early Boomers were simulated to be “at risk,” as well as 54.7 percent of the Late Boomers and 57.4 percent of the Generation Xers. When analyzed by preretirement income in 2003, households were simulated to be “at risk” 79.5 percent of the time for the lowest one-third, 57.3 percent for the middle-income group, and 39.6 percent for the highest-income group.
FUTURE ELIGIBILITY IN A DEFINED CONTRIBUTION PLAN: When the simulation results are classified by future eligibility in a defined contribution plan, the differences in the “at-risk” percentages are quite large. For example, Gen Xers with no future years of eligibility have an “at-risk” level of 60 percent, compared with only 20 percent for those with 20 or more years of future eligibility.
RUNNING SHORT OF MONEY: The model simulates a distribution of how long retirement money will cover the expenses for Early Boomers (assuming retirement at age 65). A household is considered to “run short of money” if their resources in retirement are not sufficient to meet minimum retirement expenditures plus uncovered expenses from nursing home and home health care expenses. After 10 years of retirement, 41 percent of those in the lowest (preretirement) income quartile are assumed to have run short of money, but only 23 percent of the next-lowest quartile, 13 percent of the third quartile, and less than 5 percent of the highest-income quartile.
ADDITIONAL SAVINGS NEEDED: While knowing the percentage of households that are “at risk” is obviously valuable, it does nothing to inform one of how much additional savings is required to achieve the desired probability of success. Therefore, this analysis also models how much additional savings would need to be contributed from 2010 until age 65 to achieve adequate retirement income 50, 70, and 90 percent of the time for each household. While this concept may be difficult to comprehend at first, it is important to understand that a retirement target based on averages (such as average life expectancy, average investment experience, and average health care expenditures in retirement) provides, in essence, a retirement planning target that has approximately a 50 percent “failure” rate. Adding the 70 and 90 percent probabilities allows more realistic modeling of a worker’s risk aversion.
Executive Summary
MODELING RETIREMENT INCOME ADEQUACY: The EBRI Retirement Readiness Rating™ was developed in 2003 to provide assessment of national retirement income prospects. The 2010 update uses the most recent data and considers retirement plan changes (e.g., automatic enrollment, auto escalation of contributions, and diversified default investments resulting from the Pension Protection Act of 2006) as well as updates for financial market performance and employee behavior (based on a database of 24 million 401(k) participants).
“AT RISK” LEVELS, BY AGE AND INCOME: The baseline 2010 Retirement Readiness Rating™ finds that nearly one-half (47.2 percent) of the oldest cohort (Early Baby Boomers) are simulated to be “at risk” of not having sufficient retirement resources to pay for “basic” retirement expenditures and uninsured health care costs. The percentage “at risk” drops for the Late Boomers (to 43.7 percent) but then increases slightly for Generation Xers to 44.5 percent. Households in the lowest one-third when ranked by preretirement income are simulated to be “at risk” 70.3 percent of the time, while the middle-income group has an “at-risk” level of 41.6 percent. This figure drops to 23.3 percent for the highest-income group. These numbers are generally much more optimistic than those simulated for the same groups seven years earlier. In 2003, 59.2 percent of the Early Boomers were simulated to be “at risk,” as well as 54.7 percent of the Late Boomers and 57.4 percent of the Generation Xers. When analyzed by preretirement income in 2003, households were simulated to be “at risk” 79.5 percent of the time for the lowest one-third, 57.3 percent for the middle-income group, and 39.6 percent for the highest-income group.
FUTURE ELIGIBILITY IN A DEFINED CONTRIBUTION PLAN: When the simulation results are classified by future eligibility in a defined contribution plan, the differences in the “at-risk” percentages are quite large. For example, Gen Xers with no future years of eligibility have an “at-risk” level of 60 percent, compared with only 20 percent for those with 20 or more years of future eligibility.
RUNNING SHORT OF MONEY: The model simulates a distribution of how long retirement money will cover the expenses for Early Boomers (assuming retirement at age 65). A household is considered to “run short of money” if their resources in retirement are not sufficient to meet minimum retirement expenditures plus uncovered expenses from nursing home and home health care expenses. After 10 years of retirement, 41 percent of those in the lowest (preretirement) income quartile are assumed to have run short of money, but only 23 percent of the next-lowest quartile, 13 percent of the third quartile, and less than 5 percent of the highest-income quartile.
ADDITIONAL SAVINGS NEEDED: While knowing the percentage of households that are “at risk” is obviously valuable, it does nothing to inform one of how much additional savings is required to achieve the desired probability of success. Therefore, this analysis also models how much additional savings would need to be contributed from 2010 until age 65 to achieve adequate retirement income 50, 70, and 90 percent of the time for each household. While this concept may be difficult to comprehend at first, it is important to understand that a retirement target based on averages (such as average life expectancy, average investment experience, and average health care expenditures in retirement) provides, in essence, a retirement planning target that has approximately a 50 percent “failure” rate. Adding the 70 and 90 percent probabilities allows more realistic modeling of a worker’s risk aversion.
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