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.
Thursday, July 29, 2010
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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