Monday, January 24, 2011

EBRI Reports More U.S. Households At Risk of Running Short of Retirement Income

Employee Benefit Research Institute (EBRI) has published an analysis showing that, depending largely on age and income, between 4% and 14% of Americans who otherwise would have had adequate income to cover basic expenses in retirement became "at risk" of running short because of the housing and financial crisis of 2008–2009. EBRI's Issue Brief "A Post-Crisis Assessment of Retirement Income Adequacy for Baby Boomers and Gen Xers" was designed to find out (1) what percentage of U.S. households became at risk and (2) of those who are at risk, what additional savings do they need to make each year until retirement age to make up for their losses from the crisis?

The EBRI report also provides additional percentages of compensation that various types of households will need to save each year until retirement age to have a 50%, 70%, or 90% probability of having sufficient retirement income to meet basic retirement expenditures and any uninsured health care costs for their full retirement. For example, the median percentage of additional compensation for Early Boomers wanting a 50% probability of retirement income adequacy are 3.0% of compensation each year until retirement age, to account for the financial and housing market crisis in 2008–2009.

Source: Employee Benefit Research Institute Press Release (January 20, 2011)

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