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Retirement security is a pressing issue

storm gathering clouds ominous nycA retirement crisis is coming.Among retirement experts, certain facts are self-evident.

Population aging and increases in longevity are wreaking havoc on long-standing assumptions about retirement and how to fund it. Traditional pension plans that offer guaranteed retirement income are vanishing, supplanted by 401(k)s.

And, this week marks the 10-year anniversary of when Congress took an important step in helping Americans save and prepare for retirement through the passage of the Pension Protection Act (PPA).

We are indeed better off because of the PPA's affirmation of the Saver's Credit, higher retirement plan and IRA contribution limits, catch-up contributions, and its facilitation of "automatic" plan features. What's more is the PPA is an inspiring example of how Congress can unite in a bipartisan effort on a critical issue to implement positive change.

But while the PPA made significant strides, many — including myself — now realize that it simply did not go far enough toward helping Americans achieve a secure retirement. Ten years later, the storm clouds are intensifying over the impending retirement crisis and Americans from all generations are worried and uncertain about how they'll afford retirement.

According to the latest annual retirement survey from the Transamerica Center for Retirement Studies (TCRS), one of the largest surveys of its kind and which I have directed for many years, 45% of Boomer workers are expecting a decrease in their standard of living when they retire. A staggering 83% of Generation X workers believe they'll have a harder time achieving financial security than their parents' generation. Among Millennials, the youngest generation in the workforce, only 18% are very confident about their future retirement.

Our three-legged stool of retirement — Social Security, employer-sponsored retirement benefits and personal savings — is a good system that has served us well for decades but it has become wobbly. It is in urgent need of repair and modernization to address longer lives, workforce trends, the emerging "gig" economy, and other macro-economic forces.

Social Security, the first leg of the retirement stool, is weighing heavily on the minds of American workers. According to the survey's findings, 77% of workers are concerned that Social Security will not be there for them when they are ready to retire. The survey also found that workers identified fully funding Social Security to ensure it can pay guaranteed benefits for future generations of retirees as their top retirement-related priority for our next president and Congress.

Employer-sponsored retirement benefits, the second leg of the stool, play an invaluable role in helping workers fund retirement. As a sign of the times, the survey found that only 25% of workers are expecting to receive retirement income from a company-funded defined benefit plan while far more, 69%, are expecting income from 401(k)s, 403(b)s, and IRAs. Notably, workers' second most frequently cited retirement-related priority for the next president and Congress is encouraging 401(k) or similar plans to offer the option to pay retirement benefits in a form that guarantees retirees a set income for life.

What about personal savings? The third leg of the retirement stool is coming up short. Only 16% of workers strongly agree that they are building a large enough retirement nest egg. One source of their financial distress is the lingering hangover from the Great Recession. Despite a lower unemployment rate and a recovered stock market, the survey found that 61% of workers have not yet fully recovered from the recession.

Our retirement system needs to be further stabilized through the addition of a fourth leg — continued employment. Most Americans are already anticipating working as part of their retirement plans. According to the survey findings, the majority of workers plan to work past age 65 or do not plan to retire, including 66% of Boomers and 55% of Gen Xers. And most plan to continue working at least part-time in retirement. This can be a good thing for many people, but these expectations are more wishful thinking than reality. Staying on the job is easier said than done. It depends on workers keeping their skills up-to-date, staying healthy enough to work and, moreover, ensuring that employment opportunities are available to them.

Without a doubt, retirement security is one of the most pressing issues of today. As our nation did with the PPA 10 years ago, regardless of who is elected this coming November, our next president and Congress must unite in a bipartisan effort to address our nation's retirement insecurity. The range of possible solutions is wide and may be disruptive and controversial, including reforms to Social Security, how to expand access to workplace-based savings plans, new lifelong learning programs to help people stay employed, and changes to employment laws to facilitate longer working lives, along with a host of other opportunities.

Aging is something that we all share in common. As each day passes, we all grow a day older. For some retirement is already here, for others it becomes closer. Now is the time to strengthen our retirement system so that today's and future generations can afford a comfortable and dignified retirement.

Catherine Collinson, President of the Transamerica Institute and Transamerica Center for Retirement Studies. Courtesy of Transamerica Catherine Collinson serves as President of the Transamerica Institute and Transamerica Center for Retirement Studies, and is a retirement and market trends expert and champion for Americans who are at risk of not achieving a financially secure retirement.

About Transamerica Center for Retirement Studies

The Transamerica Center for Retirement Studies® (TCRS) is a division of Transamerica Institute®, a nonprofit, private foundation. The Transamerica Institute is funded by contributions from Transamerica Life Insurance Company and its affiliates and may receive funds from unaffiliated third parties. For more information please refer to www.transamericacenter.org and follow TCRS on Twitter at @TCRStudies.

About the 17thAnnual Transamerica Retirement Survey

The analysis contained in Perspective on Retirement: Baby Boomers, Generation X, Millennials was prepared internally by the research team at TCRS. The online survey was conducted within the U.S. by Harris Poll on behalf of TCRS between April 11 and May 12, 2019 among a nationally representative sample of 4,161 full-time and part-time workers, including 1,353 Millennials, 1,232 Generation X, 1,462 Baby Boomers and 114 workers who were born prior to 1946. Potential respondents were targeted based on employment status and company size. Respondents met the following criteria: U.S. residents, age 18 or older, full-time or part-time workers in for-profit companies, and employer size of 10 or more. Results were weighted where necessary to bring them into line with the population of US residents age 18+, employed full-time or part-time in a for-profit company with 10+ employees, and to adjust for attitudinal and behavioral differences between those who are online versus those who are not, those who join online panels versus those who do not, and those who responded to this survey versus those who did not. No estimates of theoretical sampling error can be calculated.






Video: Comptroller DiNapoli Addresses America's Retirement Security Crisis

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Date: 14.12.2018, 14:25 / Views: 91595