Tags: Americans | retirement | plans | disrupted

TD Ameritrade Survey: 66 Percent of Americans Have Seen Retirement Plans Disrupted

By    |   Tuesday, 07 April 2015 08:00 AM

Stuff happens, as they say (usually in more salty language). And that stuff can throw a major wrench into your retirement plans.

A total of 66 percent of Americans have seen their retirement plans disrupted, according to TD Ameritrade's 2015 Financial Disruptions Survey.

And what are the disrupters? Of the 2,019 respondents, 43 percent cited loss of employment/lower wages, 36 percent cited family or home plans, 28 percent cited poor investment/business performance, 24 percent cited supporting others and 19 percent cited accident, illness or disability.

On average, “Disrupted Americans” reduced their monthly long-term/retirement savings by almost $300 during the disruption. The disruptions last nearly five years, resulting in $16,000 less being saved than would have been saved without the disruption.

Financial disruptions cost Americans $2.5 trillion in lost long-term and retirement savings, the study concluded.

"Every human being faces the threat of a financial disruption because there will always be external factors that can upset the course of a person’s life. The key is to have a financial plan that incorporates risk management, because no one knows when these disruptions can occur," said Lule Demmissie, managing director of retirement at TD Ameritrade.

"Saving and planning for our retirement does not guarantee we will be 100 percent protected from disruptions, but what it can do is help shelter us from the unexpected and give us a stronger footing in adjusting after a disruption."

Meanwhile, a recent study about retirement savings written for Boston College's Center for Retirement Research by Alicia Munnell, Matthew Rutledge, and Anthony Webb, looks at both sides of the coin.

"Federal Reserve data show that retirement preparedness has been declining over time, but studies on the level of preparedness offer conflicting assessments," they write.

"The National Retirement Risk Index (NRRI) finds half of households are 'at risk,' while studies of optimal savings suggest less than one-tenth will fall short."

So who's right?

"The optimal savings results depend crucially on two assumptions: households spend less when their kids leave home (the NRRI assumes no decline), and households plan for declining consumption in retirement (the NRRI assumes steady consumption)," the report states.

"While the issue remains unsettled, the Federal Reserve data are consistent with the NRRI finding that retirement shortfalls are a growing problem."

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Stuff happens, as they say (usually in more salty language). And that stuff can throw a major wrench into your retirement plans.
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Tuesday, 07 April 2015 08:00 AM
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