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Tags: Columnist | Arends | Americans | Retirement

Columnist Arends: Americans Ignore Looming Retirement Crisis

By    |   Tuesday, 04 March 2014 06:01 PM EST

Everybody sensible knows we're facing a retirement crisis, yet everyone keeps whistling and hoping for the best. But mounting research suggests a lot of people look set for misery during retirement, writes MarketWatch columnist Brett Arends.

Money management firm Natixis released its 2014 Global Retirement Index, which compares the outlook for retirement in different countries. Its assessment considers a broad range of factors, from tax pressures to pollution to the accessibility of healthcare.

The U.S. ranked 19th of 150 countries.

Editor’s Note: 18.79% Annual Returns . . . for Life?

Despite its reputation as the land of opportunity, as well as having the 6th highest income per capita, the U.S. places 81st for income inequality and 33rd for life expectancy, relatively low compared with other advanced Western nations, the researchers noted.

And although U.S. health expenditure is high relative to other countries, it's not matched by a competitive number of physicians or hospital beds per capita, the reported added.

Arends notes that the Boston College Center for Retirement Research also updated its National Retirement Risk Index, which doesn't make for happy reading.

It highlights the “stark issue” that the booming stock market has not greatly helped Americans address their retirement needs because most people don't own much stock.

The weak housing recovery is also weighing on Americans' balance sheets. And the Federal Reserve's policy of suppressing short-term interest rates effectively equates to a “harsh tax on savers,” hurting retirement prospects further, notes Arends.

Based on Boston College's projections, 60% of low-income workers and 40% of higher-income workers are at risk of being unable to maintain their standard of living in retirement.

The Employee Benefits Research Institute (EBRI), a Washington, D.C., think-tank, paints a similar picture in its Retirement Readiness Rating, Arends continues.

It suggests 43% of Boomers and “Generation Xers” are at risk of running out of money in retirement.

Among those in the poorest 25%, EBRI estimates a stunning 83% are at risk.

And these bleak numbers are based on the most rosy financial scenarios, Arends adds.

It has become increasingly apparent that in order to ensure financial security, individuals need to take personal ownership of their destiny, the Natixis researchers wrote.

But the outlook for Americans assuming that type of responsibility isn't good, according to Gail MarkJarvis' Chicago Tribune article.

She says research from the EBRI suggests the dreary life of a scavenger for millions of Americans who haven't stashed away for enough money or blew it in retirement planning.

Some young people still have a fighting chance, but only those with an “paternalistic”employer pushing them to squirrel away money from every paycheck.

Left to your own devices, you aren't as likely to be as secure in the future, she writes.

Editor’s Note: 18.79% Annual Returns . . . for Life?

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Mounting research suggests a lot of Americans are heading for financial misery during retirement, writes MarketWatch columnist Brett Arends.
Tuesday, 04 March 2014 06:01 PM
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