Thread: Retirement picture bleak for 4 out of 10

http://www.ajc.com

'Risk index' helps figure retirement needs

AJC staff report

Published on: 06/06/06

More than four in 10 Americans may be unable to maintain their pre-retirement standard of living when they retire, a study released Tuesday concludes.

But the study says that by working longer and saving 3 percent more, Americans can "substantially improve" their financial outlook in retirement.

The study was released Tuesday by Boston College's Center for Retirement Research.

The center created a retirement "risk index" to determine how many Americans will be able to maintain their pre-retirement lifestyles once they leave the workforce.

"The index shows that, even if people retire at age 65 and households annuitize all their wealth including the receipts from reverse mortgages on their homes, 43 percent will be at risk," the study says.

The center's report says most current retirees are able to afford a "decent retirement."

But it warns: "this group is living in a golden age that will fade as Baby Boomers and Generation Xers reach traditional retirement ages in the coming decades."

The study cites four reasons:

• Social Security benefits will replace a diminishing percentage of pre-retirement earnings as the normal retirement age rises from 65 to 67.

• Pension plans have shifted toward self-directed 401(k)s that leave workers more vulnerable to underfunding and mistakes.

• Most of the working-age population "saves virtiually nothing outside their employer-sponsored pension plan."

• Asset returns have declined over the past two decades and out-of-pocket medical costs are expected to consume a higher proportion of retirement income.

Younger boomers face bigger risks

The study says "Early Boomers" born between 1946 and 1954 are best prepared among future retirees, with 35 percent at risk of being unable to maintain pre-retirement standards of living.

The "at risk" numbers rise to 44 percent for "Late Boomers" born between 1955 and 1964 and to 49 percent for members of "Generation X," born between 1965 and 1972.

While the study does not advocate specific fixes, it concludes that "changing retirement and savings behavior can substantially improve the outlook."

"Indivuduals, employers and policymakers all have a role in bringing about these changes to ensure sufficient retirement income for an aging society," it says.

The center plans to update its risk index periodically.

To see the report go to bc.edu.

http://www.newsmax.com/money/archives/a ... 1.cfm?mn=1

Study Confirms Grim Retirement Picture

MoneyNews
Wednesday, June 7, 2006


Retirement is going to be extraordinarily difficult for baby boomers, and even worse for members of Generation X – a group that will have to deal with diminished Social Security and less chance of receiving any pension, according to the National Retirement Risk Index, a study released by Boston College's Center for Retirement Research.

According to a Los Angeles Times report: "The study by Boston College is the latest addition to a growing body of research that suggests households headed by working-age adults are poorly prepared for retirement.

"The study estimates that most people need 65% to 85% of their annual income in their working years to stay secure in retirement. But 43% of U.S. households will fall at least 10% short of that range, the study found, using what it said were conservative projections."

At the same time, members of Generation X (which generally includes those born from 1965 through 1972) are looking at a considerably more dire situation. "People in the future will face enormous pressure," Alicia Munnell, director of the Center for Retirement Research and former member of the White House Council of Economic Advisors, tells Newsday.

She says there is no magic panacea to solve the problem and that the only hope is for workers to save more and stay at their jobs longer. The report advises people to "consistently set aside 6% of their paychecks (with a 3% employer match), invest prudently and leave the money alone."

"Saying it hoped to draw attention to the issue, Boston College unveiled a new National Retirement Risk Index based on survey data from 4,500 households in the Federal Reserve's 2004 Survey of Consumer Finances. Researchers calculated that the risk of falling short had risen from 31% in 1983 to 43% in 2004," the Times reported.

And there is more disturbing scenario, the paper says. "The percentage of households at risk of an insecure retirement rises to 66% under a less rosy set of assumptions – for example, if workers retire at age 63 instead of at 65."

I am not surprised considering the wide spread fraud in social security and other services granted to illegal aliens while the government grants amnesty allowing them to receive those benefits. The system will be bankrupt for Americans who spent their entire lives paying into it and reach retirement. I constantly see illegal aliens at expensive clothing and jewelry stores wearing more jewelry than I can possibly afford. Many families claim more children than they have but are not questioned or required to show proof as again they are above the law. I recently read an article where the average illegal alien family with their jobs coupled with all the welfare and social security assistance they receive amounts to at least 10,000 dollars more per year than I receive in military retirement pay. And I can't work now as I have medical issues so I have to rely on this to live. Doesn't make sense when this treasonous government permits wide spread fraud perpetrated by illegal aliens in essence allowing them to earn more and treating them better than a military veteran with combat duty and disability. I was recently turned down by the corrupt ssn selling VA when I applied for additional disability. As Americans we all lose and I am so tired of this g-d damn useless, drug cartel, Mexican Mafia and fortune 500 pandering government.

While the study does not advocate specific fixes, it concludes that "changing retirement and savings behavior can substantially improve the outlook."

I love this statement. More and more of the middle class is finding it necessary to use everything they have just to pay the bills and going without things such as medical insurance. I would love to change my savings behavior but that would require having something to save