Financial Assets Are Taking Center Stage for Future Retirees

“Retirees are becoming more dependent on financial assets to maintain their standard of living because of the shift in retirement savings from defined benefit pensions to defined contribution plans and because Social Security is expected to replace a smaller share of earnings due to the increase in the full retirement age (now 67 for those born between 1960 and 1967).” So says the Center for Retirement Research’s (CRR) February report titled “Will the Financial Fragility of Retirees Increase?” summarized in a post today on

The report highlights the increasing importance of accumulated financial resources as a means to offset the gradual disappearance of pension benefits and the steadily dropping income replacement rates offered by Social Security, a situation that exposes future retirees to the perils of market risk. The CRR report also indicates that, to make matters even more dire, many families tend to understate the earnings value of their savings by assuming rates higher than they will likely realize.

Against this backdrop, the CRR findings suggest that “The most effective response for households approaching retirement is to increase their retirement income and reduce their fixed expenses,” with the implication being that taking steps like working longer, finding ways to bolster cash reserves, and reducing living expenses will help make their future financial situation less fragile. The Association of Mature American Citizens (AMAC) recognizes the importance of bolstering long-term financial security through savings, and has incorporated provisions for this in its “Social Security Guarantee Act of 2017” (Act) now being promoted in Washington. This legislative framework includes provisions for an “Early Retirement Account” that would “provide a means for all earners to have more income available at retirement,” and would enlist the support of investment experts to assure the quality of investment options, with a portion of the proceeds mandated to be invested in guaranteed interest accounts or annuities. Learn more about AMAC’s proposed Act here…

To access the article on the CRR report, click here…


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