Suddenly, Retiree Nest Eggs Look More Fragile

From the New York Times online:

...the median financial net worth of American households of all ages, excluding homes and cars, is $10,890, as estimated by Edward N. Wolff, an economics professor at New York University.

For households headed by those in the 55-to-64 age bracket, it’s $61,300. A large majority of Americans are in far worse straits than the millionaire households.

Some readers asked how to protect their financial nest eggs. Others observed that in this economy, saving more and spending less wasn’t always possible. I’ll return to challenges like these in future weeks.

But first, it’s worth examining some of the systemic issues that led to this state of affairs. My previous column didn’t directly address the big picture — and that picture is troubling.

As Jack VanDerhei, research director of the nonprofit, nonpartisan Employee Benefit Research Institute, puts it, “very large numbers of people are at risk of running out of money in retirement.”

In a recent study, the institute found that roughly 44 percent of households in the baby boom and Gen X generations — those born from 1948 to 1975 — were likely to run short of cash in their retirement years.

And forthcoming research from the institute finds that low bond yields are worsening the situation. These low rates are unlikely to continue indefinitely; global markets last week were in disarray over speculation that the Federal Reserve might take action that could lead to higher rates.

But if current low yields did persist indefinitely, Mr. VanDerhei has found, 56.7 percent of boomer and Gen X households would find themselves at risk of running through all their assets in their lifetimes.

Many people sense that they’re heading toward danger.

In an October survey by Pew Research, 38 percent of adults said they were “not too” or “not at all” confident that they would have enough income and assets for retirement, up from 25 percent in late February and March of 2009.

Strikingly, more than half of those in their late 30s were in the not-confident categories, compared with only about one-third of those in their early 60s...
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Link: http://www.nytimes.com/2013/06/16/your-money/suddenly-retiree-nest-eggs-look-more-fragile.html