Most Retirees and Near Retirees "Consumed by Fear"

A recent article in Bloomberg discusses the financial challenges faced by most retirees in the United States and the steps that the Obama Administration is taking to address the crisis.

The demise of defined benefit pension plans over the past thirty years correlates almost perfectly with the rise of defined contribution plans such as 401ks.

The reality is that with the exception of Social Security, most Americans are on their own when it comes to saving for retirement.

Equally if not more important, most Americans are responsible for taking what savings to exist and making them last through what will likely be many years of retirement.

The Obama Administration is considering a number of steps that are intended to help people understand how much more they need to save and how important it is to make those savings last for a very long time.

Among the legislative and regulatory considerations are:

  • Monthly statements in 401k plans that show what level of monthly income could be supported by the accumulated savings.
  • A more solid regulatory framework for employers who may want to offer annuities within their 401k plans.

The Obama Administration has made it clear that they are not considering mandatory or compulsory annuitization.

Source: Bloomberg

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