Tuesday, June 06, 2006

National Retirement Risk Index

Alicia Munnell and colleagues conclude that retirement risk has been growing steadily over time due to; changes in Social Security replacement rates, the shift from DB plans to 401(k)'s where participants generally mismanage their saving and investment responsibilities, increasing life expectancy and lower interest rates.

They estimate that 43% of future retirees will be at risk of being more than 10% below a calculated target replacement ratio at retirement. Single women, low income households and those with no pensions or 401(k)'s only are most at risk. And if that is not bad enough, retiree risk increases to 66% if the assumption that retirees annuitize their assets and acquire reverse mortgages is relaxed.


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