Entries in Retirement Funds (3)


Study: Unemployed Baby Boomers Dipping into Retirement Savings

Jupiterimages/Thinkstock(NEW YORK) -- Millions of aging baby boomers have cracked into their nest eggs, raided their 401(k)s and other retirement funds because they need the money now.

A new study from the non-profit Transamerica Center for Retirement Studies finds that only one in 10 displaced workers is very confident about the ability to retire comfortably.  The findings are based on a Harris Interactive poll of more than 620 unemployed or underemployed people.

Catherine Collinson, president of the Transamerica Center says, “Many have raided retirement accounts to make ends meet -- and it will be difficult for them to overcome these savings setbacks once they regain employment.”

Copyright 2012 ABC News Radio


How Would Failure to Raise Debt Ceiling Affect 401(k)s?

Photodisc/Thinkstock(WASHINGTON) -- If Congress fails to raise the U.S. debt ceiling, what will be the consequences for U.S. savers and investors?

Two economists at the Center for American Progress, a progressive advocacy group, believe the consequences could be dire. The stock market, they say, could drop by 20 percent to 30 percent. And 401(k)s, which in the past two years have rebounded from losses suffered earlier in the recession, could see those gains largely erased.

A report by financial services company Fidelity Investments found that by the end of the first quarter, the average 401(k) balance had surged past where it had been before the recession.  It's exactly these gains, said the two economists, that are in jeopardy if the nation's debt ceiling isn't raised.

Heather Boushey and Christian Weller expressed their views, respectively, in testimony before Congress in July and in a May white paper.

Boushey predicts that allowing the economy to "slam into the debt ceiling will undoubtedly create an immediate economic shock," with disastrous consequences for the job market.  Government, unable to borrow, would need to reduce spending immediately by 40 percent.  The same shock, she believes, would trigger a sharp fall in the stock market.

"Families with 401(k)s would likely lose all the gains they have made in 2010 and much of their gains in 2009, moving them further below where they were at the end of 2007 after the stock market fell sharply," she said.

The blow would be felt most painfully by baby boomers of retirement age, since this generation, unlike previous ones, is more dependent on market-sensitive 401(k) savings than on fixed pensions.

The hit to 401(k)s, coupled with what she said would be a further decline in home prices, will deal the middle-class a double whammy.  Near record-breaking unemployment rates would make it difficult for older, unemployed boomers to work their way out of their retirement hole.

Of the ongoing struggle in Congress over what to do about the debt ceiling, Boushey's colleague Weller wrote: "What may seem like an esoteric debate far removed from people's lives could in the end become a major setback for families' economic security."

Given that almost 60 percent of 401(k) money, he said, is invested in stocks, a 20 percent market drop would cost the average saver $7,911; a 30 percent drop would cost almost $12,000.

How much any individual's 401(k) would be affected by a market drop would depend, of course, on how the money had been invested.

Copyright 2011 ABC News Radio


Aging Middle Income Americans Unsure About Retirement Funds

Photo Courtest - Getty Images(CHICAGO) -- Almost two out of every three middle-income Americans are not sure whether or not they've saved enough money to live comfortably after they retire, a new study said on Wednesday.

The Bankers Life and Casualty Company Center for a Secure retirement studied Americans between the ages of 55 and 75 who made between $25,000 and $75,000. The Middle-Income Retirement Preparedness Study found that 63 percent of them are unsure about their future and that greater than 50 percent don't take any professional retirement advice. Even more worrisome was that half of the sampled group turn to the Internet, where anyone can post information, for direction.

"Rising health and long-term care costs, the declining value of investments and an uncertain economic future all highlight the need for retirement plans that protect savings and make money last," said Scott Perry, president of Bankers Life and Casualty Company.

The study also found that 84 percent of people who choose not to work with a professional advisor say they don't think they need one, or that they could do it on their own.

CSR found that a majority also spend less than one hour per month planning on how to manage their retirement funds. The study leans towards the use of a profesional advisor saying that more than two-thirds of respondents who use help feel better prepared for retirement than their counterparts.

Copyright 2011 ABC Radio News


ABC News Radio