Retirement Wake Up Call: For Most Americans Retirement Savings Does Not Equal Retirement Income

A Retirement Paycheck is Critical for Vast Majority of Retirees to Maintain Their Standard of Living

 

Reston, VA, [July 20, 2004] – While millions of Americans are working hard to save for retirement by contributing regularly to 401(k)s, 403(b)s and IRAs, their retirement savings plans may be missing a critical component necessary to help them maintain their standard of living in retirement:  guaranteed lifetime income.

While these popular retirement accounts play a key role in a balanced retirement plan, most make no provision for distributing income during retirement and offer no protection against the risks facing retirees today.  As a result, relying exclusively on these accounts may not guarantee the income required to fund most individuals’ envisioned retirement lifestyles. 

Americans planning for retirement need to understand the common risks that can negatively impact their retirement savings.  These include:

·       Risk of outliving retirement savings due to longer lifespans

·       Risk that an economic market downturn will dramatically reduce retirement savings

·       Risk that promised employer or government benefits will not be available when needed

·       Risk that poor health or prolonged illness will prematurely drain retirement savings

·       Risk that family issues (e.g., divorce, death of a spouse) will dramatically impact
available resources

Most Americans have not factored these risks into their retirement plans.  This is underscored by a recent MetLife survey, which found that a majority of pre-retirees are not well informed about many of the issues that will affect their retirement years.  In fact, 77 percent of respondents

did not realize that longevity is the greatest financial risk they face, and nearly two-thirds were not aware that an individual reaching age 65 has a 50 percent chance of living beyond age 85.[1]

NAVA, the NAVA, recommends that Americans consider the value of converting some of their retirement savings into investments that will provide guaranteed lifetime income and mitigate these risk factors.  An annuity, when used as part of a retirement plan, offers the flexibility to combine lifetime pension-like payments with a wide range of life insurance benefits to protect retirees against retirement risks. 

“The sooner future retirees wake up and begin thinking in terms of guaranteed retirement income, the better the chance of living their retirement dreams,” said Mark Mackey, president and CEO of NAVA.  “Retirement living funded solely by regularly drawing down retirement savings can leave individuals vulnerable.  I strongly urge everyone planning for retirement to talk with a financial advisor about how an annuity can help secure their financial future.”

 

About The National Association for Variable Annuities (NAVA)

NAVA is a non-profit trade association located in suburban Washington D.C.  NAVA provides a variety of services to the industry including educational forums, research and conferences aimed at furthering the development and understanding of fixed and variable annuities, income annuities and variable life insurance.  NAVA also maintains and supports an educational website for consumers at www.RetireOnYourTerms.com.

 

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