Scraping Together Retirement Income


According to the Federal Reserve’s 2010 Survey of Consumer Finances released in June, the typical U.S. household between ages 55 and 64 held just over $42,000 in their tax-exempt (IRA, 401(k), etc.) retirement plans, and the average value of bank savings accounts dropped in half, to $18,000. That’s about $60,000 available for retirement which, when coupled with the maximum Social Security benefit, would last retirees with a current household income of $100,000 about one year and one month (based on an 80 percent replacement rate).

[CLICK HERE to read the bulletin, “Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances,” at the Federal Reserve, June 2012.]

[CLICK HERE to read the report, “401(k) Plans in 2010: An Update from the SCF,” at the Center for Retirement Research at Boston College, June 2012.]

The Boston College’s Center for Retirement Research recently published a report revealing that a mere 42 percent of private sector workers in the U.S. had defined-benefit and/or defined-contribution plans at work in 2010. While more women now participate in employer plans than 30 years ago, recent analysis shows that participation is closely correlated to earnings. Among the top quintile of high earners, two-thirds of workers–both male and female–participate in plans, whereas only 11 percent of workers in the bottom quintile participate. Given the continued lag in earnings of women compared to men (in 2010, the median earnings of women working full-time were about $36,900, compared to $47,700 for men[1]); participation numbers among women also lag compared to men.

From 1998 to 2009, working women surpassed men in their likelihood of having an employer that offered a pension plan, but were less likely to be eligible for and participate in those plans. When you consider that women are more likely to become single (widowed or divorced) in old age, possess a higher life expectancy and on average earn less lifetime income than men, the risk of retirement poverty is significantly higher for women.

The United States Government Accountability Office recently published a report concerning the plight of women facing retirement, stating that although recent economic events have affected both men and women, the outcome has the potential to exacerbate older women’s financial insecurity.

[CLICK HERE to read the report, “The Pension Coverage Problem in the Private Sector,” at the Center for Retirement Research at Boston College, September 2012.]

[CLICK HERE to read the paper, “Retirement Security: Women Still Face Challenges,” at the United States Government Accountability Office, July 2012.]

Is it any wonder then that in a recent AP-GfK poll, the majority of respondents said they supported raising taxes and the retirement age in order to save Social Security benefits for future generations? Participants indicated they would rather pay more taxes than reduce the level of monthly benefits, which currently represents about 40 percent of retirees’ income, on average.

[CLICK HERE to read the article, “Narrow majority supports raising taxes, retirement age to save Social Security,” at AP-GfK, August 26, 2012.]

One of the biggest financial challenges in your life may be funding your own retirement–independent of the government or your employer. We can take a look at all of your assets, even sources you may not perceive as assets, and help you position them to provide retirement income. In the future, many Americans may be scraping together retirement income, but we’d like to help you secure it.







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 [1] Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, “Income, Poverty, and Health Insurance Coverage in the United States: 2010” Current Population Reports, Consumer Income, United States Census Bureau, P60-239 (September 2011).

Source: Woods Blog Old

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