Thinking about retirement savings?
1965 to 1978. What does that bring to mind? Mick Jagger and The Rolling Stones reaching the top of the music charts (Satisfaction and Miss You). Or maybe Paul McCartney doing the same, first with The Beatles (Yesterday) and then with Wings (With A Little Luck). If you were born during this period, you are considered to be part of Generation X. Flash forward to 2012 and we see both the Stones and McCartney performing live at Madison Square Garden in New York City, with thousands of Gen X'ers and Baby Boomers in the audience. Undoubtedly, Mick and Paul have saved more than enough for a secure retirement. But what about their fans?
According to the latest report from the Employee Benefit Research Institute (EBRI), Gen X is doing well for the most part on the road to retirement savings, particularly when home ownership is factored in. Assuming an individual remains employed until age 65 and maintains housing equity in retirement until financial resources are depleted, four in five have either significantly more than enough or are right around the threshold for retirement income adequacy. This four in five figure is comprised of 49% with greater than 20% more than the threshold, plus another 31% within 20% on either side of the threshold. While this news is mostly positive, EBRI does caution that Gen X single females in the lowest income levels are at risk of not having sufficient financial resources in retirement. The complete findings are reported as part of the November 2012 EBRI Notes.
ICI report sees retirement as much more sturdy than others typically do.
According to new research from the Investment Company Institute, there is reason for great optimism about the health of the American retirement system, much in contrast to less sanguine predictions. The conventional wisdom views the retirement system as a three-legged stool. The ICI believes that this is too narrow and it broadens the scope to include two additional layers. The ICI posits that the better approach is to view retirement as a five-layer pyramid. According to the ICI, the retirement system has provided individuals with adequate resources, and successive generations of retirees have been better off than their predecessors.
Among the key findings in the ICI report, The Success of the U.S. Retirement System:
The composition of the pyramid will vary from one household to another, but the key difference when compared to the traditional three-legged stool is that the ICI model factors in housing resources and a broad "other assets" category. Here is an example from the ICI report of the emphasis it places on homeownership:
"Homeownership is like having an annuity that provides rent, as the home provides a place to live that otherwise would have to be rented."
The ICI perspective is very interesting. It would appear to go far to explain how earlier generations survived in retirement even with relatively modest resources. The full ICI report, The Success of the U.S. Retirement System, is available on its website.
If you are an employer, or someone who is working with an employer, and you are looking to benchmark the success or struggles of your retirement plan, where can you turn to for data? Google (or any other search engine), of course, can be your friend in this task. To make it simple, however, here are a handful that you might find useful (some websites might require registration):
This list is not intended to be a complete one. There are probably dozens of other reports that also would be helpful in benchmarking retirement plans. Hopefully, this brief list will prove useful in getting started.
Blog Author - Ken Felsher
With over 25 years of writing, editing, and research experience. I enjoy sharing with my readers my love of working with content on a variety of subjects.
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