51% of US households are now considered at risk of not having enough money to sustain their standard of living in retirement. Words: 369
So reports Humberto Cruz at Boston.com and in further edited excerpts from the original article* Michael Myers (www.retirementcrisisinvesting.com) goes on to say:
That’s the case even if they work until 65 – two years beyond the current average retirement age – and take a reverse mortgage on their home and use all their assets, including the mortgage proceeds, to buy an inflation-adjusted lifetime annuity to maximize their income.
In 2004, about 43 percent of households were considered at risk, based on the center’s analysis of a triennial Federal Reserve survey of consumer finances. In 2007, the number rose to 44 percent, the center now estimates, based on that year’s Fed survey. Without waiting for 2010 survey, the center’s researchers decided to update the index in response to the recent recession and economic crisis.
Admittedly, the new 51 percent figure is based not on actual Fed survey results but on the center’s projections of what they would have been in the second quarter of 2009. Since then, financial conditions have improved. The index does not factor in possible income from work in retirement.
Still, while stocks are bouncing back, home prices are unlikely to shoot up again. With people living longer, the Social Security full-retirement age increasing gradually to 67, and low interest rates keeping annuity payouts low, the analysis “clearly indicates that this nation needs more retirement savings,’’ the center’s report says.
“We are clearly facing a retirement crisis – one that will continue to grow as younger workers age,’’ said Alicia Munnell, director of the center. “To overcome today’s retirement challenges, people need help understanding financial topics so they can make reasonable financial choices throughout their lives.’’
Many Americans are reacting to the economic downturn not by resolving to save more but by no longer actively planning for retirement. “That’s exactly the opposite of what they should be doing,’’ said Paul Ballew, senior vice president at Nationwide Insurance.