Retirement Risk Index Indicates Many are Not Ready For Retirement

Millions of Americans - 43 percent of all working-age households - are at risk of lower living standards when they reach 65, according to a new National Retirement Risk Index released Tuesday by the Center for Retirement Research at Boston College. Even two-earner households are at risk, because Social Security replaces less of their preretirement income.

The retirement risk index is drawn primarily from analysis of the federal government's Survey of Consumer Finances, which is updated every three years. By applying research methods to the federal surveys since 1983, the center found we're in substantially worse shape than we used to be.

The retirement risk index is based on a best-of-all-possible worlds scenario. It assumes workers don't retire until they are 65, that they spend down the equity in their homes by getting a reverse mortgage and that they create their own pensions by putting all their savings in an inflation-adjusted annuity at retirement - three things most Americans don't do.

Change those assumptions to workers retiring at 63, not tapping into home equity and investing their assets themselves, and a whopping 66 percent of working-age households are at risk.

One reason retirement readiness has declined over the last two decades is that fewer workers can count on a traditional pension plan. Instead, many have retirement savings plans, such as 401ks, which they have to fund and manage themselves.

Younger people and those in low-income households are most at risk of being unable to support their current lifestyles when they reach retirement age. Retiring later and saving more are ways to tackle the problem.

Source: Center for Retirement Research at Boston College

Brought to you by the Senior Money Blog

'Retired' Baby Boomers Continue Working

An AARP survey found that 80 percent of baby boomers will continue to work, at least part-time, after retirement. Some will work by choice, whiles others will be forced to work due to financial conditions.

Some retired boomers will choose to take the opportunity to share their experience and knowledge and start a new career. They will work more out of enjoyment and satifisfaction then from necessity.

Other baby boomers though, will face the necessity to keep working do to disappearing pensions and less medical coverage. The will have to go to work just to make ends meet at a time in their life when they should be enjoying themselves.

Brought to you by the seniormoney.blogspot.com

Financial Planners Say Retirement Income Market Will Grow Slowly

The 2006 FPA Financial Advisors' Attitudes and Perceptions survey about the Retirement Income Distribution Market, sponsored by OppenheimerFunds Inc. and produced by the Diversified Services Group, Inc. (DSG), indicates that the majority of financial planners believe that the retirement income market will grow substantially, but at a slow pace.

"Regardless of the pace of growth, retirement continues to evolve into a more and more complex financial planning issue," said Kathleen Beichert, Senior Vice President of Retirement Plans at OppenheimerFunds, Inc.

Key findings of the study:

• Systematic withdrawal strategies and dividend-paying investments are by far the most commonly recommended retirement income solutions.


• Specific income-generating products such as annuities and Certificates of Deposits (CDs) are recommended far less frequently.


• 60 percent of the planners surveyed have recommended reverse mortgage products at some point, however, only 6 percent recommend them often.


• 75 percent of those surveyed use some type of retirement income planning software program. Two-thirds of these programs are modified accumulation programs or were designed by the planners themselves.


• Respondents typically rely on existing clients to fuel their retirement income business. It appears that this group waits for their clients to reach retirement age and/or leverages their existing relationships for referrals.

"While existing clients and referrals are always a good way to target this market, there is a real opportunity for planners to reach out toothers who need help with retirement planning," said Beichert. "Planners should look for ways to partner with financial services companies and expand their retirement income client base."

The study also contains implications for providers of products and services to financial planners. "Financial services companies, financial planners, and technology vendors must develop more sophisticated planning tools that segment clients and provide them with credible, justifiable, tailored solution sets that are simple in concept, but adaptable to a variety of financial needs during the early and late retirement life stages," added Vickery.

About the Financial Planning Association: The Financial Planning Association(R) (FPA(R)) connects those who need, support and deliver financial planning. We believe that everyone is entitled to objective advice from a competent, ethical financial planner to make smart financial decisions. FPA members demonstrate and support a professional commitment to education and a client-centered financial planning process. For more information on FPA, visit http://www.fpanet.org.

Brought to you by the http://seniormoney.blogspot.com