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Retirement News
Many Retirees Left Work Due to Health, Find Expenses
Higher Than Expected
Baby boomers have highest level of financial readiness finds
Fidelity survey of working Americans
 March 14, 2007 - Two thirds of retirees say their
expenses since retirement have either gone up or stayed the same,
although the vast majority expected them to go down or at least stay the
same. A surprise in the survey was the discovery that most of the
retirees say they left work earlier than expected with almost 1 out of 4
saying they were forced to retire because of poor health or a
disability.
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Related Stories |
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Government Wants to Allow Companies to End Health
Insurance for Retirees at 65
AARP asks - will they next reinstate mandatory
retirement
Feb. 28, 2007 - If the government gets its way,
companies will be allowed to terminate health care benefits for retirees
that have reached age 65, because they qualify for Medicare. The AARP is
challenging this proposed rule by the Equal Employment Opportunity
Commission in a court of appeals, saying this is age discrimination.
Read more...
Senior Citizens Packing Up and Heading Home from
Retirement Meccas
USA Today finds a challenge facing communities in
North, Midwest
Feb.
26, 2007 Senior citizens, maybe living longer than they thought, are
returning to their home states in the North and Midwest after leaving
their homes at retirement for life in Florida or other popular
retirement states. These returning now-much-older Americans are less
independent than when they left and are creating a challenge for the
communities they want to call home, again. This aging 'boomerang' was
explored by USA Today.
Read
more...
Money Matters for Seniors
Three Major Retirement Hazards to Avoid
Retirement can be beginning of new life but there are
dangers
By
Robert Valentine
January 12, 2007 - Retirement planning is a tricky
process, and one that requires careful planning and patience. But even
if you have a retirement plan and a clear set of visions and goals, not
just financially, but for your lifestyle, its important that you be
aware of several common missteps that many, even those with a plan, fall
victim to. Read
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Boomers, Young Seniors Nearing Retirement Need
Annual Benefits Checkup
Employee Benefit Research offers 10
questions to be answered
December 6, 2006 - The end of the year is a good time for workers -
especially baby boomers and younger seniors nearing retirement - to take
a close look at their retirement benefits, says Dallas Salisbury,
president of the nonpartisan Employee Benefit Research Institute (EBRI)
and an expert on retirement issues. He offers a list of ten questions
pre-retirees should answer.
Read more...
Read more
on
Retirement |
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This survey of retirees was a part of the Fidelity
Research Institutes 2007 Retirement Index, an annual study of working
Americans, which showed the typical working American household is on
track to replace 58 percent of their income in retirement - a slight
increase from last year's Index level of 57 percent.
As part of the Retirement Index, which was released
this week, the Institute surveyed 793 retirees, age 55 or older, to
better understand the financial needs and experiences of Americans
living in retirement today.
Two-thirds of retirees reported their expenses
either went up (39 percent on average) or stayed the same (28 percent),
when compared to levels experienced just prior to retirement.
Interestingly, most retirees (82 percent) expected their monthly
expenses in retirement to mirror what they were pre-retirement (34
percent) or go down (48 percent).
Many retirees (55 percent) reported leaving the
workforce earlier than planned. In fact, nearly one-quarter (22 percent)
of retirees were forced to retire early because of poor health or a
disability. This is an important finding since the Index found that
nearly two-thirds (63 percent) of today's workers plan to work in
retirement to supplement their income.
"Americans are relying on their ability to work
longer to make up for their savings shortfall; however, the experience
of the retirees we surveyed, many of whom had their work years cut short
due to health issues, makes that expectation a risk," said Patton.
Working Americans on Track to Replace 58 Percent
of Income In Retirement
The third annual Index found that working Americans
have a median of $22,500 in total household retirement savings and
anticipate receiving $29,500 in annual Social Security payments. In
addition, 51 percent of households expect to receive a pension and
anticipate median benefits of $18,000 annually.
Baby boomers had the highest level of readiness,
with an income replacement level of 62 percent, up 2 points over 2006,
and a median of $45,000 in total household retirement savings.
Among workers who believe they are saving enough
for retirement, which is nearly one-quarter (23 percent) of those
surveyed, the Index found they are on track to replace a significantly
higher percentage of their pre-retirement income, 68 percent, due
largely to better saving habits. The median savings rate for these
workers is 7.5 percent of their annual pay, compared with 3.5 percent
for workers overall.
Additionally, 42 percent of workers say they took
action recently to improve their retirement readiness by taking steps
such as reallocating their retirement portfolios, increasing
contributions to their workplace plans and seeking professional
guidance.
"We're beginning to see a positive savings trend in
the Index, as significant numbers of workers have reported taking
financial action during the past two years to improve their retirement
readiness," said Guy L. Patton, executive director of the Fidelity
Research Institute. "But these numbers also tell us that the typical
American household, who is on track to replace 58 percent of their
income in retirement, will need to adjust to living on 42 percent less
income when they retire. This is worrisome since many retirees say
they're spending more money than planned and some have not been able to
work as long as they would have liked."
Generation X Financially Stretched
The Index found that one in five working Americans
between the ages of 25 and 42 currently provide or expect to provide
financial support in the future to their parents or in-laws. Of those
currently providing financial support to their parents, one-quarter have
had parents move in with them.
The typical amount of financial support being
provided to aging parents by Gen Xers is $3,500 annually, a figure
nearly equivalent to the current maximum annual IRA contribution of
$4,000. Financial support of this nature is provided primarily to cover
food, utilities, health care and other general expenses.
Not surprisingly, this generation also has the
least amount saved. One in five Gen Xers have yet to begin saving for
retirement and the median total household retirement savings for the
group overall is $11,250. This personal savings will be increasingly
important as less than half of Gen Xers (41 percent) expect to receive a
pension, compared with the majority of Boomers (60 percent).
"We are beginning to see that Gen Xers are becoming
'sandwiched' -- much like baby boomers have been for years --
shouldering multiple financial pressures that include caring for aging
parents, providing for their own families and saving for retirement,"
Patton said. "The good news is that Gen Xers have time on their side and
40 percent report taking action over the past six months to improve
their retirement readiness."
About the Fidelity Research Institute Retirement
Index
Data for the Index is collected annually through a
national online survey of more than 2,000 Americans who work full-time;
are 25 years or older; earn $20,000 a year or more; married/partnered
with individuals who are also not yet retired; and are the financial
decision makers in their household.
Index calculations rely on the Fidelity Research
Institute's proprietary asset-liability modeling engine, which generates
the percentage of potential pre-retirement net income that each
individual American household surveyed is likely to replace upon
retirement. The Index represents the median (or midpoint) of the
approximately 2,000 individual household percentages produced. Results
are weighted to reflect demographic trends in the United States.
Interviews for the 2007 Index were completed for
the Fidelity Research Institute by Richard Day Research of Evanston,
Ill., between January 15 -18, 2007.
About the Retiree Survey
An online survey of 793 retirees ages 55 or older
was conducted by Northstar Research Partners on behalf of the Fidelity
Research Institute between January 23 - 28, 2007. Retirees were the
primary or joint financial decision makers for the household, were
retired from full-time work and, where applicable, had spouses/partners
who also were retired.
About the Fidelity Research Institute
The Fidelity Research Institute is designed to
advance knowledge of how proven investment theory and public policy can
be put into practice to help Americans invest wisely to meet their
financial needs. The Institute works with resources across Fidelity
Investments as well as within the financial services industry and
academia to accomplish its mission. Its reports are available at
www.fidelityresearchinstitute.com.
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