EBRI Says Adequacy Of Retirement Income Still A Concern

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The adequacy of retirees income remains a public policy concern, according to Craig Copeland in the May Issue Brief by Employee Benefit Research Institute, Washington.

In the brief, the senior research associate examines overall pension/retirement plan participation rates among all workers 16 and older.

Many high-income U.S. residents are saving for their later years, but many arent, he says.

When Copeland looked at newly released pension plan participation data from the U.S. Census Bureau, he found that, even among U.S. residents who were making at least $50,000 in 1993 dollars in 1998, 25% were not participating in a pension plan.

For those making less than $5,000 in constant 1993 dollars in 1998, the pension plan participation rate was only 13%, Copeland says.

Meanwhile, Copeland notes, even though pension plan participation rates are higher for 50-year-olds than for younger workers, participation rates decrease for workers over age 50.

In 1998, 60% of workers between the ages of 41 and 50 participated in pension plans, compared with 7% of the workers between the ages of 16 and 20. But the participation rate for workers over age 65 was only 23%.

Among the findings implications is that the nation is not prepared to handle the financial consequences of a generation of elders lacking substantial resources for retirement.

“Even if Congress acts in the near future to close the Social Security funding deficit, the adequacy of retirees income remains a critical public policy issue, since Social Security was never meant to be the sole source of the elderlys income in retirement,” Copeland says.

He suggests that the information in the brief neednt be viewed as entirely negative, and points to a potential growth area for life insurers in annuities.

“The overall movement to defined contribution plans has put potentially more dollars out there for the potential of being annuitized which would be a very important product going forward for life insurance companies,” he says.

“There will be a lot more lump sum dollars (consumers will) have to manage. If they annuitize, theyll be protected against outliving their resources.”


Reproduced from National Underwriter Life & Health/Financial Services Edition, June 3, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.