Retirement Readiness: A Framework and Prospects for Future Improvement
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Transcript of Retirement Readiness: A Framework and Prospects for Future Improvement
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Retirement Readiness: A Framework and Prospects for
Future Improvement
Don EzraASEC Fellow
October 20, 2010
ASEC Partners Meeting
ASEC General Partners MeetingOctober 20, 2010
Don Ezra
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Endowed zone
Bequest zone
Lifestyle zone
Essentials zone
Pre-annuitized wealth
Think of several “wealth zones”
Continue to accumulate
Enough to annuitize or support lifestyle
Enough to annuitize or support essentials
EBRI findings for the Essentials Zone
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Early Baby Boomers: 47% won’t attain the ceiling
Late Baby Boomers: 44%Gen Xers: 44%
An improvement of 12 percentage points in seven years
Lowest one-third by income: 70%Middle one-third: 42%Top one-third: 23%
How much will it help to save more?
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Early Baby Boomers, lowest income group: more than 25% of pay needs to be added to annual saving, to bring failure rate down to 50%
Above-median income groups: additional 10% of pay saved would raise success rate above 90%
And some don’t need to save any more at allAuto-enrollment and auto-escalation features in
DC plans are enormously powerful, particularly for those with 30-40 years of future saving
Lower-income: reaching post-retirement target of 80% of pre-retirement income (preserved in real terms): 46% success improves to 79%
Higher income: 27% improves to 64%