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Jim Lentini: Challenges faced by rebuilding retirement savings

Posted: January 11, 2010 10:45 p.m.
Updated: January 12, 2010 4:55 a.m.
Recent research with 1,000 Americans ages 45 to 75 reported that three particular categories of individuals - recent retirees, near-retirees and job-changers - are challenged with rebuilding their retirement savings.

Market volatility, inflation, rising health care costs and concerns about the future of Social Security all factor heavily into their retirement income planning dilemma.

In addition, those same investors are fearful about getting back into the equity markets and are keeping a large percentage of their assets in either cash or fixed income.

Retirees and retirement goals
At the height of the financial crisis, a third of this group pulled its assets out of equities and now half doubt the likelihood of growing their savings in time for their intended retirement.

In fact, 29 percent have already postponed retirement and a further 42 percent are likely to delay indefinitely. More than two-thirds would be likely to consider a variable annuity with a guarantee in their 401(k) plan.

Retirees lack confidence
Only half of the recent retirees surveyed are confident that their current income sources will "definitely" support their basic retirement needs.

They are even more doubtful about those resources supporting their desired lifestyle. Asset preservation is key, but almost 75 percent said they want growth, too, and are intrigued by the idea of guaranteed products.

Catch-up mode
Sixty percent of respondents in the job-changer category believe they are now "behind schedule" with respect to retirement savings compared to less than half of the non-job changers.

As a result, the job-changers seem willing to invest more aggressively in an effort to catch up. They may have money sitting in qualified accounts from prior employers that could be generating future guaranteed retirement income.

Job-changers indicated a strong likelihood to consider products with guaranteed features.

Whether the goal is asset growth, preservation or a combination of both, a variable annuity with a GWB (guaranteed withdrawal benefit) rider can be beneficial in helping protect and guarantee growth in retirement planning.

These statistics are provided from a industry research, "Impact of the Market Crisis on Retirement Preparedness," published in April 2009.

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investments, Inc. His column reflects his own views and not necessarily those of The Signal.


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