- Sep 26, 2000
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http://news.yahoo.com/s/nm/200...s_nm/usa_retirement_dc
"Baby boomers" may still outlive assets
"Baby boomers" may still outlive assets Mon Jul 14, 6:29 PM ET
Even baby boomers who prune spending when they retire risk outliving their assets as they likely will live longer and experience volatile rates of both inflation and investments, a new study said on Monday.
Almost three out of five new middle-class retirees will outlast their savings unless they live more modestly after they quit the work force, said the study commissioned by Americans for Secure Retirement, a lobbying coalition for policies to help Americans retire.
The oldest among the 77 million baby boomers are the best-prepared, according to the study, done for the coalition by accountants Ernst & Young. Middle-class people now retiring only face an average cut of 24 percent in their standard of living while those who won't retire for seven years face a 37 percent reduction, it said.
Rhode Island, New York, Utah and the District of Columbia are the four places where residents are least likely to burn all their savings.
Retirees in Montana, South Dakota and Wyoming are the most likely to outlive their nest eggs, according to the study.
Companies that sell annuities would benefit from some of the policies the coalition supports. For example, the group backs a congressional bill that would shield half of the income from a lifetime annuity from taxation, up to $20,000 a year.
Married couples are more likely to outlive their assets than single individuals, the study said. For example, so-called near retirees, at age 58, have an average nest egg of $105,000 if their yearly income is $50,000. Their savings rise to an average of $280,000 if they earn $100,000 a year.
New retirees, with an average age of 65, have $175,000 in savings if they earned $50,000, and $585,000 if they earned $100,000 a year, the study said.
"Many Americans envision a retirement where their lifestyle continues much as before," said Tom Neubig of Ernst & Young.
"Our work shows this is not a realistic expectation and that, with the current state of savings and potentially very long life expectancies, many retirees will have to cut back far more on expenditures than they had ever expected."
"The very real possibility of living to age 90 or 100 combined with the volatility of inflation and investment returns means that the risk of outliving one's assets is quite high," the study said.
As I have consistently posted. It is virtually impossible for an individual to use their actual private savings as their sole means of retirement. You cannot predict how long you will live. And therefore you either use the figure of 100 years old, which would mean you would need to put every penny you ever earned into your retirement, or use the average lifespan and put in less. However, either way you cannot predict how much you will need. And therefore their will always be tens of millions of retirees who use their entire savings and go penniless. And so the government would have to support you, or let you die.
Which is why privatizing retirement cannot possibly succeed.
"Baby boomers" may still outlive assets
"Baby boomers" may still outlive assets Mon Jul 14, 6:29 PM ET
Even baby boomers who prune spending when they retire risk outliving their assets as they likely will live longer and experience volatile rates of both inflation and investments, a new study said on Monday.
Almost three out of five new middle-class retirees will outlast their savings unless they live more modestly after they quit the work force, said the study commissioned by Americans for Secure Retirement, a lobbying coalition for policies to help Americans retire.
The oldest among the 77 million baby boomers are the best-prepared, according to the study, done for the coalition by accountants Ernst & Young. Middle-class people now retiring only face an average cut of 24 percent in their standard of living while those who won't retire for seven years face a 37 percent reduction, it said.
Rhode Island, New York, Utah and the District of Columbia are the four places where residents are least likely to burn all their savings.
Retirees in Montana, South Dakota and Wyoming are the most likely to outlive their nest eggs, according to the study.
Companies that sell annuities would benefit from some of the policies the coalition supports. For example, the group backs a congressional bill that would shield half of the income from a lifetime annuity from taxation, up to $20,000 a year.
Married couples are more likely to outlive their assets than single individuals, the study said. For example, so-called near retirees, at age 58, have an average nest egg of $105,000 if their yearly income is $50,000. Their savings rise to an average of $280,000 if they earn $100,000 a year.
New retirees, with an average age of 65, have $175,000 in savings if they earned $50,000, and $585,000 if they earned $100,000 a year, the study said.
"Many Americans envision a retirement where their lifestyle continues much as before," said Tom Neubig of Ernst & Young.
"Our work shows this is not a realistic expectation and that, with the current state of savings and potentially very long life expectancies, many retirees will have to cut back far more on expenditures than they had ever expected."
"The very real possibility of living to age 90 or 100 combined with the volatility of inflation and investment returns means that the risk of outliving one's assets is quite high," the study said.
As I have consistently posted. It is virtually impossible for an individual to use their actual private savings as their sole means of retirement. You cannot predict how long you will live. And therefore you either use the figure of 100 years old, which would mean you would need to put every penny you ever earned into your retirement, or use the average lifespan and put in less. However, either way you cannot predict how much you will need. And therefore their will always be tens of millions of retirees who use their entire savings and go penniless. And so the government would have to support you, or let you die.
Which is why privatizing retirement cannot possibly succeed.
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