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Pattaya Daily News

16 May 2008 :: 15:05:51 pm 25257

Report Finds Americans Are Unprepared For Retirement

The combination of rapidly approaching retirement and concerns about post-retirement financial security has not translated into more personal savings for most Americans, said Standard & Poor‘s in a report released today.
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The report, titled “Older But Not Wiser: Why Americans Remain Dangerously Unprepared For Retirement,” finds that the average American household savings rate remains near 0%. This article is one of a series of articles on pensions and OPEB liabilities that will appear in a special report in the May 26, 2008, issue of Standard & Poor’s CreditWeek. Standard & Poor’s will hold a conference call at 10:00 a.m. EDT on Wednesday, May 21, to discuss these issues. (Dial-in information for this teleconference is at the end of this article.)

According to Standard & Poor’s chief economist David Wyss, the lack of saving has helped keep economic growth positive but will make it more difficult for older Americans to finance their retirement. Most Americans also continue to rely on the government to provide for their retirement. Mr. Wyss noted that although they say they’re unsure about future Medicare and Social Security benefits, they’re doing little to increase their wealth before retirement.

“One solution is likely to be more post-retirement work as more retirees seek a so-called bridge job in early retirement,” said Mr. Wyss. “Unfortunately, health and labor market conditions often prevent even those who intend to work from doing so. In addition, in a weakening economy, bridge jobs could be harder to find,” he added.

Moreover, only 37% of Baby Boomers who are about to enter into the post-employment world have a traditional pension coming from their employer. That’s down from 60% in 1983.

In addition, the shift to defined-contribution pensions–the most common types of which are 401(k)s, IRAs, and 403(b)s–from traditional defined-benefit ones has had mixed results. On the plus side, the percentage of households with no pension coverage has declined slightly, to 34% from 37% in 1983. However, in 2004, the median 401(k) plan for people in the 55 to 64 age group was worth only US$60,000–not enough to provide for much of a retirement. (In 2006, the average 401k balance for people in their 60s was $157,727.)

Mr. Wyss explained that the other problem for the near-retired is the poor performance of the asset markets in recent years. The S&P 500 will have its worst decade since the Depression if it closes below 1469 at year-end 2009. “Retiring in a period like such as this strains assets in the best case, and this is far from the best case,” noted Mr. Wyss. “Asset values have been declining, while saving rates have hovered near 0%, and if older workers aren’t adding to their wealth and if their asset values are falling, the prospects of a comfortable retirement are receding. The average household had wealth equal to 558% of after-tax income at year-end of 2007, down from 569% a year earlier and 618% at the market peak in 1999,” he concluded.

The teleconference to discuss these issues is at 10:00 a.m. EDT on Wednesday, May 21. In the U.K., the dial-in number for this teleconference is (44) 20-7108-6390, and the number for everywhere else is (1) 210-795-0624. The Conference ID is 4804379, and the passcode is SANDP.

The report is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor’s credit ratings, research, and risk analysis, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor’s public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request a copy of this report by contacting the media representative provided.

Reporter : PDN staff   Photo : PDN staff   Category : Announcement News

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