The Concern over Retirement Income Security

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In today's financial landscape, retirement income security is a pressing concern. Polling data shows that many Americans are worried about the future. For instance, in a public opinion report from the National Institute on Retirement Security, 86 percent said they believe America is facing a retirement crisis. Likewise, 75 percent indicated they were highly anxious in their retirement outlook.

The National Institute for Retirement Security found this concern to be held across generational, gender, and economic demographics. Concern over retirement income security also showed in the respondents' plans for the future. Over 50 percent plan on seeking employment in retirement for additional income. And 42 percent reported they are worried they will have to sell their home for retirement income security purposes.

Slow economic recovery has helped reduce these fears. But it's a trend which continues to persist.

Factors Influencing the American Retirement Landscape
There are a few factors which are helping fuel these public concerns about retirement:

Retirement account losses – The 2008-2009 financial crisis had strong effects on Americans' retirement accounts. For instance, between December 2007 and December 2008, the Standard & Poor's 500 Index declined 37 percent.

In turn, it had a tremendous impact on retirement accounts with investments tied to stock market performance. This decline resulted in retirement account losses of $2.8 trillion, or 32 percent of their value (Mauricio Soto, “How is the Financial Crisis Affecting Retirement Savings?” Fact Sheet, Urban Institute 2008).

Fewer Americans with pensions in retirement – In the past, pensions were a staple for American retirement security. However, according to the business consultancy Towers Watson, this dynamic has changed greatly. In the last 15 years, the percentage of largest American companies offering defined-benefit pensions to new employees has declined from 60 to 24 percent.

Many American companies now have employees help contribute to their retirement accounts – or leave this task to them entirely. As a result, other retirement vehicles such as fixed index annuities are becoming popular alternatives.

Greater amounts of people entering retirement – Another factor is tied to demographics. There are simply more people entering retirement than before. Around 76 million Americans were born between 1946 and 1964.

According to Pew Research, that means about 10,000 new baby boomers reach retirement age each day. This large wave of retirees poses new challenges for America's existing retirement infrastructure – which is already overwhelmed due to skyrocketing healthcare costs, higher daily living costs, and lower payouts for Social Security benefits.

Inadequate retirement savings – According to the Boston College Center for Retirement Research, many American households don't have adequate retirement savings. In fact, according to data from the BCCRR's National Retirement Risk Index, as of 2013 over 50 percent of American households possesses insufficient retirement funds to maintain their standard of living. This trend is likely to persist even if people in these households worked past the traditional retirement age at 65.

Retirement Income Security Solutions
There are solutions available to help you prepare for retirement. One such offering is fixed index annuities – which can offer principal protection and some opportunities for index linked growth while safeguarding money against market risk. According to Advantage Compendium Ltd., Americans have purchased almost $400 billion in fixed index annuities since 1995.

For more information about this and other annuity options, check out our comprehensive page on annuities. Should you be interested in evaluating whether an annuity makes sense for your lifestyle goals and financial picture, can help you. Use our Find a Licensed Advisor section to connect directly with an independent financial professional, and to request a personal strategy session to discuss your needs and goals. And should you have any questions or concerns, call 877.476.9723.

Author: Super User

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