Nevin's Data "Points"

Retirement planning is a complex and highly individualized process, but many people find it easier to start by focusing on a single, specific target number. For those interested in a single number for health care expenses in retirement, a recent EBRI report provides that. Among other things, the report noted that a 65-year-old man would need $70,000 in savings and a woman would need $93,000 in 2012 if each had a goal of having a 50 percent chance of having enough money saved to cover their projected health care expenses in retirement. A 65-year-old couple, both with median drug expenses, would need $163,000 in 2012 to have a 50 percent chance of having enough money to cover health care expenses. 1 Determining how much money is needed to cover health care expenses in retirement is complicated. It depends on retirement age, the length of life after retirement, the availability and source of health insurance coverage after retirement to supplement Medicare, the rate at which heal...

Even the best retirement planning requires a fair number of assumptions: the age at which you hope to retire, for one thing; the amount of income that living in retirement will require; the length of time over which your retirement will last; the rate of return on your savings prior to, and following, retirement; the sources of retirement income that will be available to you, and in what amount(s). Consider that in the 2012 Retirement Confidence Survey while worker confidence in having enough money to pay basic expenses in retirement wasn’t exactly high (only 26 percent were very confident), workers were noticeably less likely to feel very confident about their ability to pay for medical expenses after retirement (13 percent) and even less likely to feel very confident about paying for post-retirement long-term care expenses (9 percent) — levels that have remained statistically unchanged since 2010. Indeed, the lack of employment-based retiree health insurance may result in unanti...

Our industry pays a lot of attention to the investment choices that retirement plan participants make; we fret about the type and number of choices on their investment menu, the efficacy of target-date funds, the utilization of active versus passive investment strategies, and the prudence of the asset allocation choices that individuals make—with or without the benefit of tools and/or professional guidance. Unfortunately, once they leave that part of our private retirement system, not so much. A significant percentage of that retirement plan money winds up in individual retirement accounts, or IRAs. In fact, today IRAs represent more than a quarter of all retirement assets in the U.S., according to a recent EBRI Issue Brief. But there remains a limited amount of knowledge about the investment behavior of individuals who own IRAs, alone or in combination with employment-based retirement plans. In order to fill this gap, EBRI has undertaken an initiative to study in depth this con...

Trying to figure out how much money an individual or couple needs to live on in retirement is, to put it mildly, a complicated business. Among other factors, it depends on the age at which he or she retires, where they live, and how they live. It can be affected by marital status, their health, and the markets, both before and after retirement. And, as a recent EBRI Notes article (see “Savings Needed for Health Expenses for People Eligible for Medicare: Some Rare Good News” ) explains, it can also be affected by the availability and source of health insurance coverage after retirement to supplement Medicare, and the rate at which health care costs increase. Additionally, public policy that changes any of the above factors will also affect spending on health care in retirement. Consequently, trying to hit that target can feel like aiming at a bulls-eye that is not only moving, but moving fast, and zig-zagging away from the bouncing, moving vehicle in which you find yourself. W...

As a growing number of Americans near and enter retirement, concerns about the cost of post-retirement health care expenses loom larger.   In fact, worker confidence about their ability to pay for medical expenses after retirement was just half what they expressed about their ability to pay for basic retirement expenses (see EBRI’s2012 Retirement Confidence Survey ).   Little wonder, since a recent EBRI Issue Brief noted that health-related expenses are not only the second-largest component in the budget of older Americans, they are the only component which steadily increases with age (see “ Expenditure Patterns of Older Americans, 2001 ‒ 2009 ”).    Recognizing the potential financial impact, recent industry surveys have put a figure on the cost of post-retirement health care expense 1 —a figure above and beyond that of merely living in retirement.   EBRI has gone to great lengths to model the major risks to retirement income adequacy all the way back ...

On March 13, (1) the Employee Benefit Research Institute (EBRI) and Mathew Greenwald & Associates, Inc., will unveil the 22nd annual Retirement Confidence Survey (RCS)—the longest-running annual retirement survey of its kind in the nation. Indeed, the RCS is unique in offering a perspective on retirement that is now as long as the retirement of those living to average life expectancy at 65. Consider that back in 1996, the sixth annual RCS found that 24 percent of retirees were not confident that they would have enough money to live comfortably throughout their retirement years, and more than 1 in 5 said their lifestyles were worse than when they first retired (with nearly 1 in 10 calling them "a lot worse"). The report noted that “[t]wo-thirds of those working then predicted they would work after they ‘retire,’ and nearly 40 percent of those say they think they'll need to for financial reasons, to pay the bills and make ends meet.” Five years later, the 2001...

In this business you are frequently asked “how much should people save for retirement?” Some try to answer that question with a degree of specificity that can be somewhat simplistic. Let’s face it, even if those close enough to retirement to have a sense of what their pre-retirement income level is (and, flawed as that can be, most projections start from that assumption as a baseline for what you’ll want/need to spend in retirement—see “Replacement” Window ), most struggle to turn that into a real savings figure. Ultimately, of course, a reliable answer to that retirement savings question requires an understanding of the individual’s goals and/or financial needs—and, predicated on certain assumptions, there are any number of tools that can help individuals set a target and (based on that) establish a savings plan. However, the planning question that almost never gets asked is: “And how certain do you want to be of achieving that target?” Asked that question, I suspect most ind...

On Dec. 8, the Pension Benefit Guaranty Corporation (PBGC) convened a forum on “the Future of Pensions.” The forum was structured around two separate panels of experts (including EBRI President and CEO Dallas Salisbury) who spoke to an audience of pension industry thought leaders on the current retirement landscape, as well as potential enhancements and solutions. Among the insights/observations shared in the session: • In 1975, among those over age 65, 23 percent had pension/annuity income; in 2010, that had risen to 33 percent. • According to EBRI’s Retirement Readiness Rating (RRR) 57 percent of those under age 65 were considered to be at risk of not having sufficient retirement resources to pay for “basic” retirement expenditures and uninsured health care costs, a figure that had declined to 45 percent in 2010. • In fact, a world in which 30-year job tenure (and associated pension benefit) was never a reality for 80 percent of the nation’s workers. Rather, it was a myth...

I’ve been a huge “Star Trek” fan all the way back to when I had to watch the original episodes on a tiny black-and-white, 13-inch television set with rabbit ear antennas (and, yes, adorned with aluminium foil). Unlike most of my friends at the time, my favorite character was Mr. Spock, whose understated strength, brilliant mind, and quiet commitment to logic had an appeal to a young kid who fancied himself to have all those attributes (thankfully, my ears weren’t pointed). Perhaps as a result, early on, I mastered the “infamous” Vulcan salute that many people struggle to perform unassisted (it consists of raising your hand and spreading your fingers apart between the middle and ring finger), and the Vulcan greeting/blessing that accompanied the gesture—“Live long and prosper”—always struck me as being as elegant as it was simple. While we all hope to prosper and live long, a recent Issue Brief released by the Center for Retirement Research at Boston College reminds us of the financia...

Like most Americans who have health insurance (and most do), I’m reasonably happy with what I already have. And like many Americans, I’m willing to take the President at his word from the campaign trail—that if you like the insurance you have, you’ll get to keep it. But as I study the text in the two bills that will have to be merged to create legislation to fulfill that promise—well, I have to tell you, I’m not sure how that’s going to happen (1) . That matters, IMHO, not only in the here-and-now world of paying for health care versus saving for retirement (and there’s plenty of evidence to suggest that many participants are making those trade-offs), but even more so in the post-retirement world where those burgeoning health-care costs stand to siphon so much from nest eggs that are perhaps already insufficient. But make no mistake—I’m all for health-care reform, just not for what is currently proposed under that banner in Washington. “For” Score I’m all for some kind of safety ne...