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PBGC Blog: Retirement Matters

NIRS: The retirement savings crisisA new study answers whether the retirement crisis is worse than we thought. The research report concludes that when all working-age families are counted, the typical family has only a few thousand dollars saved for retirement.

The study reveals:

  • The typical working-age household has only $3,000 in retirement account assets; the typical near-retirement household has only $12,000.
  • Four out of five working families have retirement savings less than one times their annual income.
  • The U.S. retirement savings deficit is between $6.8 and $14.0 trillion, depending on the household assets counted.

These findings are contained in a new research report, The Retirement Savings Crisis: Is it Worse Than We Think?, issued by the National Institute on Retirement Security (NIRS).

Read the full study on the NIRS website.

Close-up photo of calendar

Today, June 18, is National Splurge Day.

There are certain days and times of year that most people look forward to. Perhaps National Splurge Day is one of those days marked on your calendar. However, in calendars that haven't been printed yet, you may look forward to marking the day you can retire.

According to Holiday Insights, here's how to properly join in the National Splurge Day festivities:

Treat yourself excessively, to anything you want. And, to excess if you desire. Isn't that a great thing? Maybe, you're on a diet, and that special dessert is too many calories. Maybe, you want to buy a steak, and the budget is a little tight. Toss out the reservations, and go for it today.

A steak or a dessert is one thing, but don't go crazy. There's one kind of splurge you may really regret — the multi-thousand-dollar retirement binge. Too many people retire and "treat themselves" to a fancy new car or an extravagant vacation that they don't really need, and in the long run can't afford. And even while they're still working, too many people downgrade their future retirement income through "leakage" from their 401(k) plans — loans and cash-outs between jobs.

So, on National Splurge Day, go ahead, treat yourself. But definitely don't cheat yourself or your retirement. 

10 Ways to Pay...

  |   June 10, 2013

In the article, "10 Ways to Pay for Retirement," U.S. News & World Report lists the most common ways to pay for retirement.

  1. Social Security.
  2. A pension.
  3. Retirement accounts.
  4. Home equity.
  5. Stock market investments.
  6. Savings accounts.
  7. Annuities or insurance plans.
  8. Part-time work.
  9. An inheritance.
  10. Rent and royalties.

Pensions are a big part of how people prepare for retirement, along with working longer, saving more, and — as a last resort — tapping home equity. Read the full article.

Keyboard with the word, retirement, as a keySimilar to that of a "payday loan," retirees are being offered pension advances with alarmingly high interest rates — rates often higher than those on credit cards.

While financial products like pension advances, which promise quick cash, may appear enticing, keep in mind that the long-term costs are largely hidden from the borrowers.

In an effort to protect your pensions and retirement security, Senators Tom Harkin (D-IA) and Lamar Alexander (R-TN), Chairman and Ranking Member of the Senate Health, Education, Labor, and Pensions Committee, sent a letter to the National Association of Attorneys General (NAAG) requesting documentation and information that could help the Committee identify Americans who may have been targeted by lenders offering lump-sum payments, with potentially illegally high rates of interest repayment, in exchange for a stake in the borrower's pension benefits.

In the letter, Harkin wrote, "Pensions are the bedrock of economic security in retirement for millions and millions of middle-class families. But now, it appears that there are some financial operations trying to siphon a profit off of people's retirement benefits. These unscrupulous companies are offering to buy pensions for a lump-sum. That may sound like a good idea to someone who is facing financial challenges, but long term, it can actually leave them worse off down the road. I hope this bipartisan investigation will shed light on the scope of this issue and uncover the companies that are taking advantage of our nation's pensioners."

Read the full text of the letter.

Here's more useful information: The U.S. Securities and Exchange Commission Investor Bulletin - Pension or Settlement Income Streams: What You Need to Know Before Buying or Selling Them

The Economic Mobility Project of the Pew Charitable Trusts released a new report titled "Retirement Security Across Generations: Are Americans Prepared for Their Golden Years?," which provides a glimpse into the uncertain situation facing those who are approaching retirement age.

The report explores the retirement security for different age groups and examines how the Great Recession affected the wealth and retirement security of baby boomers as compared to younger and older age groups.

This research reveals that younger age groups face the greatest prospect of downward mobility in their golden years. 

Among the many significant findings in the study is that Americans born after 1955 carry more debt than have previous generations, and that this age group faces a severe decline in living standards upon retirement.

Read the full report

How PBGC is changing the narrative on Retirement Security

From J. Jioni Palmer, Director, Communications and Public Affairs:

Photo of J. Jioni Palmer, Director of Communications & Public Affairs, CPAD

J. Jioni Palmer
Director of Communications & Public Affairs

I've always been fascinated by storytelling: The Harry Potter series, This American Life, Grimm, The Twilight Zone, The New Yorker and just about anything by Walter Mosely. Books, movies, radio, print or online periodicals, fact or fiction, it doesn't matter. Interesting characters and a compelling narrative rivet me.

I also particularly like watching commercials and I'm constantly amazed by the brilliance of ad writers who can develop the scene, introduce relatable characters and tell a complete story in 30 or 60 seconds. Beyond hawking products or pushing ideas, I find commercials offer interesting insights on the zeitgeist of a particular demographic, culture or society.

Today, in almost any hour of evening television, sandwiched between myriad commercials for insurance companies and the latest solution to make housecleaning a breeze, you'll see spots about encouraging the viewer to plan for retirement.

One really resonates with me because it echoes a true story we at the Pension Benefit Guaranty Corporation tell a lot lately: people are living longer but retirement security isn't keeping pace. In the commercial, the narrator asks people to place a blue sticker along a timeline next to the age of the oldest person they've ever known. Not surprisingly, there are many dots ranging between 80 and 110. The spot closes with, "How do you make sure you have enough money to enjoy all of these years?"

Disclaimer: Neither the author nor PBGC endorses the products or services of the sponsor.

Since its inception in 1974, PBGC has been at the forefront of protecting the retirement security of the American people in defined-benefit pension plans offered by private companies. Now, most people probably don't know the agency exists, let alone think about us until the business they work for goes belly-up and they hear talk that the pension they've been looking forward to is about to evaporate.

Fortunately, PBGC does exist, and the safety net it provides allows most workers and retirees to keep the full promised benefit they've earned over many years.

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