January's Top 10 Retirement Facts and Figures | Ed Slott and Company, LLC

January's Top 10 Retirement Facts and Figures

By Jeffrey Levine, Director of Retirement Education
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@IRAGuru4EdSlott

Here's the 10 most amazing, surprising and/or illuminating facts about retirement that I read in January. Before each fact, you will find my own brief commentary, and after each fact, you will find the original article from which the fact was pulled should you be interested in further reading. This is a popular series that I plan on continuing throughout 2016.

  1. And this is precisely why, in President Obama’s final budget proposal, you’re going to see a number of provisions aimed at increasing employees’ participation in workplace retirement plans – “Only about half of workers participate in a workplace retirement savings plan, according to the Bureau of Labor Statistics.” https://www.washingtonpost.com/news/get-there/wp/2016/01/12/how-big-your-retirement-fund-should-be-at-every-age-according-to-one-guide/
     
  2. A knowledgeable professional should be able to help you understand the rules, craft a plan that uses them to your advantage, and hold you accountable so that you stay on track – “The new data, part of John Hancock's 2015 Financial Stress Survey, shows that of the people surveyed, 70 percent of those who work with a financial advisor are on track or ahead in saving for retirement, versus 33 percent of those not working with an advisor..” http://www.johnhancock.com/about/news_details.php?fn=jan2116-text&yr=2016
     
  3. Do NOT underestimate your longevity. You may live a lot longer than you think  – “There were 72,197 of them in 2014, up from 50,281 in 2000, according to the report by the Centers for Disease Control and Prevention.” http://www.nytimes.com/2016/01/21/health/centenarians-proliferate-and-live-longer.html?_r=0
     
  4. Studies show that marriage is not only good for your health, but also for your wealth! – “Mean reported post-retirement income is twice as high for couples as for singles. Mean reported financial wealth, including IRAs, is three times as much for couples as for singles.” http://www.mrrc.isr.umich.edu/publications/briefs/pdf/rb332.pdf
     
  5. Most 40 – 55 year olds are way behind retirement savings schedule... and they’re not alone – “According to the National Institute on Retirement Security, Americans between the ages of 40 and 55 have retirement savings of $14,500, when they will need between 20 and 30 times that amount.” http://www.nytimes.com/2016/01/02/opinion/a-smarterplan-to-make-retirement-savings-last.html?_r=0
     
  6. As a country and a global population, we’re going to have to come up with new and creative ways of managing our growing population of retirees – “In 1950, when world population was much younger, with a median age of 23, the global potential support ratio was about 12 people of working age per one person aged 65 years or older. Today, the world PSR has declined to eight and by the year 2050 is projected to decline to four.” http://yaleglobal.yale.edu/content/number-workers-retiree-declines-worldwide
     
  7. Progress! ...but not enough – The number of people who are likely to afford at least their essential expenses in retirement jumped seven percentage points since 2013, from 38 to 45 percent.” https://www.fidelity.com/about-fidelity/individual-investing/americas-savings-rate-improves/default-source/research/women-39-s-perspectives-on-saving-investing-and-retirement-planning.pdf?sfvrsn=2
     
  8. If you’re lucky enough to work for an employer that still offers a pension plan, it’s probably not going anywhere... at least this year – “Only 6% of employers with open pension plans are likely to close in 2016 and among open and closed plans, only about 5% are very likely to freeze pension plan account accruals in 2016.” http://www.aon.com/attachments/human-capital-consulting/2016-hot-topics-retirement-financial-wellbeing-report.pdf
     
  9. When determining how long you should plan to live, don’t rely on average life expectancies. Your socioeconomic status plays an important role in whether the average is your average – “...for example, higher-earning men can expect to outlive lower-earning men by more than five years.  Moreover, the gap between the lifespans of rich and poor has grown significantly, an abundance of research shows, and this trend is accelerating.”  http://www.cbpp.org/blog/what-the-growing-longevity-gap-means-for-social-security
     
  10. It doesn’t really matter. In either case it’s a terribly low percentage. And what’s even more shocking is that even those with income of $100,000 or more make use of the provision less than half the time – “According to new data from Fidelity, just 8% of its clients who are 50 and over make use of the catch-up program. Vanguard found in its last ‘How America Saves’ report that 16% contribute.” http://time.com/money/4175048/401k-catch-up-contributions

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