The Journal of Retirement

THE JOURNAL OF RETIREMENT Warning! These Statistics Are Unsettling. Not enough Americans are saving for retirement. Those that are, aren't saving enough. Financial literacy, Social Security strategies and planning for the potential of disability are all falling short. End 2012 $77,300 The estimated median balance in 401 k plans. Average benefit per month $1,250 401 (k) plans 1 in 2 The monthly post- retirement income the sum 1 in 10 $420 buys for a 65 year old male. American workers is a member of a pension plan provided by their employer. retired Americans have little more than their Social Security benefit to rely on. Weak financial literacy is a problem in the United States, although financial literacy does improve with age [40% Americans elect to claim their Social Security retirement benefit at 62. Most Americans believe that they have little chance of becoming disabled A recent survey finds that only a minority of survey participants understand that when bond prices go up, interest rates go down, and vice versa. 62 67 Bonds Interest Bonds Interest Sadly, Vs $20 1 in 4 Postponing a claim increases the benefit by 8% per year up to 70. 2015 2035 of today's 20 year olds will be disabled Similarly, before retirement. 4 in 10 Americans do not understand that Many retired Americans do not appreciate how rapidly they can spend down their retirement nest egg the purchasing power of a savings account balance earning 1% per annum declines if inflation is greater than 1%. A recent survey found that less than half of those surveyed had any kind of retirement plan Almost 1 in 3 DEEDS DEEDS thought that they could spend 10% of their capital each year, the sustainable rate is probably between 3% to at most 5%. Many Americans approaching retirement fail to realize that they could be obliged to retire earlier than they had planned, due to illness, disability or job loss. a group aged 41 or older surveyed in 2006 IIJ. Institutional Investor Journals www.iiJOR.com E @iiJournals Sources: BLS National Compensation Survey March 2012 | Social Security Administration (SSA) | Fidelity.com | FINRA Investor Education Foundation, "Financial Capability in the United States," Q2013) | Pensions in the Health and Retirement Study, (2010), by Alan L. Gustman, Thomas L. Steinmeier and Nahid Tabatabai. | Survey cited by David Laster et al in their contribution to the inaugural issue.