Thursday, October 20, 2011
“Most Americans Haven’t Planned for Retirement and Other Areas of Concern”
9:42 AM | 
Posted by
pensionfinancialservices |
Says Recent Disturbing Article in Wall Street Journal:
According to a recent article in the Wall Street Journal by Mary Pilon, “the troubling picture of the state of financial capability in the United States” comes from a new working paper published by the National Bureau of Economic Research, authored by Professor Annamaria Lusardi of the George Washington School of Business. “Americans’ Financial Capability” surveyed nearly 1,500 Americans in the summer 2009 and found that not only is the household financial hole deep, but people might not be able to dig themselves out of it as easily as they thought.”Even though a lot of this data was available from the Treasury in 2009, Pilon names new key findings from the study such as:
–When given a basic list of questions on economics and finance in everyday life, less than 10% of respondents are able to answer all questions correctly.
–Half of survey respondents said they had trouble keeping up with monthly expenses such as bills. Only half of those surveyed said they had rainy day funds set aside that would cover them for three months in the event of a severe loss of income, such as a layoff or illness.
–In spite of the demise of pension plans “the majority of Americans have not done any retirement planning,” Prof Lusardi writes. Only 42% of those surveyed said they have tried to figure out how much to save for retirement. Among those who are 45 to 59 years old, 51% said they had yet to calculate how much they’ll need. Only half (51%) of those surveyed said they had a retirement account through an employer. About a quarter (28%) said they had another retirement account.
–And they aren’t really sure what’s in those accounts. When asked how much of their portfolios were invested in stocks or mutual funds that contained stocks, 17% didn’t know the answer to the question. When respondents were asked whether their retirement savings were invested primarily in a target-date fund, 37% said they didn’t know the answer.
–In the last year, about one in ten (9%) of respondents who have a retirement account such as a 401(k) or IRA said they tapped their retirement savings. Most of those withdrawals were seen among those earning between $25,000 and $75,000 a year.
–Efforts to make people essentially their own money managers may also be futile. Only 21% to 25% of respondents said they have used information sent to them from Social Security. “It’s hard to equip people with information,” Prof. Lusardi says.
“One of the benefits of working with a financial advisor like Pension Parameters is that we help people make their own decisions that are comfortable – and keep the information transparent and accessible to them at all times.”
“The clients at Pension Parameters are very well informed, and if they want to be more informed with detail, they can retrieve information AND explanation from a live person whom they know at any time,” says Kevin McCormack, President.
“Given the lack of planning that is basically hitting Baby Boomers ‘where they eat,” we welcome inquiries for an appointment to plan for businesses to help them and their employees be among the informed and protected, in the best way possible.”
Based on this Wall Street Journal article, which is pretty disturbing, we urge those folks with questions to give us a call at Phone: (212) 675-9360 or (732) 583-1313.
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