Retirement Income: Ensuring Income throughout Retirement Requires Difficult Choices

» Site Navigation
Home Page The Villages Maps The Villages Activities The Villages Clubs The Villages Book Healthcare Rentals Real Estate Section Classified Section The Villages Directory Home Improvement Site Guidelines Advertising Info Register Now Video Tutorials Frequently Asked Questions
» Newsletter Signup
» Premium Tower
» Advertisements
» Trending News
» Tower Sponsors




















» Premium Sponsors
» Banner Sponsors
» Advertisements
Closed Thread
Thread Tools
  #1  
Old 07-01-2011, 11:28 AM
784caroline 784caroline is offline
Soaring Eagle member
Join Date: Jul 2007
Posts: 2,430
Thanks: 0
Thanked 4 Times in 4 Posts
Default Retirement Income: Ensuring Income throughout Retirement Requires Difficult Choices

Retirement Income: Ensuring Income throughout Retirement Requires Difficult Choices
GAO-11-400 June 7, 2011

Highlights Page (PDF) Full Report (PDF, 79 pages) Accessible Text


http://www.gao.gov/products/GAO-11-400 After opening ...CLICK ON FULL REPORT



Summary

As life expectancy increases, the risk that retirees will outlive their assets is a growing challenge. The shift from defined benefit (DB) pension plans to defined contribution (DC) plans also increases the responsibility for workers and retirees to make difficult decisions and manage their pension and other financial assets so that they have income throughout retirement. GAO was asked to review (1) strategies that experts recommend retirees employ to ensure income throughout retirement, (2) choices retirees have made for managing their pension and financial assets for generating income, and (3) policy options available to ensure income throughout retirement and their advantages and disadvantages. GAO interviewed experts about strategies retirees should take, including strategies for five households from different quintiles of net wealth (assets less debt); analyzed nationally representative data and studies about retirees' decisions; and interviewed experts and reviewed documents about related policy options.

Financial experts GAO interviewed typically recommended that retirees systematically draw down their savings and convert a portion of their savings into an income annuity to cover necessary expenses, or opt for the annuity provided by an employer-sponsored DB pension instead of a lump sum withdrawal. Experts also recommended that individuals delay receipt of Social Security benefits until reaching at least full retirement age and, in some cases, continue to work and save, if possible. For example, for the two middle net-wealth households GAO profiled with about $350,000 to $375,000 in net wealth, experts recommended purchase of annuities with a portion of savings, drawdown of savings at an annual rate, such as 4 percent of the initial balance, use of lifetime income from the DB plan, if applicable, and delay of Social Security. To navigate the difficult choices on income throughout retirement, they noted strategies depend on an individual's circumstances, such as anticipated expenses, income level, health, and each household's tolerance for risks, such as investment and longevity risk. Regarding the choices retirees have made, GAO found that most retirees rely primarily on Social Security and pass up opportunities for additional lifetime retirement income. Taking Social Security benefits when they turned 62, many retirees born in 1943, for example, passed up increases of at least 33 percent in their monthly inflation-adjusted Social Security benefit levels available at full retirement age of 66. Most retirees who left jobs with a DB pension received or deferred lifetime benefits, but only 6 percent of those with a DC plan chose or purchased an annuity at retirement. Those in the middle income group who had savings typically drew down those savings gradually. Nonetheless, an estimated 3.4 million people (9 percent) aged 65 or older in 2009 had incomes (excluding any noncash assistance) below the poverty level. Among people of all ages the poverty rate was 14.3 percent. To help people make these often difficult choices, policy options proposed by various groups concerning income throughout retirement include encouraging the availability of annuities in DC plans and promoting financial literacy. Certain proposed policies seek to increase access to annuities in DC plans, which may be able to provide them at lower cost for some individuals. However, some pension plan sponsors are reluctant to offer annuities for fear that their choice of annuity provider could make them vulnerable to litigation should problems occur. Other proposed options aim to improve individuals' financial literacy, especially to better understand risks and available choices for managing income throughout retirement in addition to the current emphasis on saving for retirement. Proposed options include additional federal publications and interactive tools, sponsor notices to plan participants on financial risks and choices they face during retirement, and estimates on lifetime annuity income on participants' benefit statements.
  #2  
Old 07-01-2011, 11:54 AM
rubicon rubicon is offline
Email Reported As Spam
Join Date: Nov 2010
Posts: 13,701
Thanks: 0
Thanked 8 Times in 6 Posts
Default 784Caroline thank you for

this information. Retirement decisions are a bear and many comapnies made it more difficult by dumping their define benefits programs.

While there are constants in this equation age, health etc they still are moving targets. You can make a solid case that you are beter off retiring at 62 and taking your social security then waiting until full retirement benefits kick in. The same applies to an annuity.

In our situation my wife and i want to leave as much money to our kids as we can....they will need it given what we see happening now. My biggest concern is Uncle Sam and so I pray that the estate tax will be eliminated. We have estblished a revocable living trust and periodically review it but the government is always one step ahead of you so that they are in a position to put their hands in your pockets. that's a longer way of saying taxes are a huge issue in retirement planning.....good luck
  #3  
Old 07-01-2011, 12:07 PM
eremite06's Avatar
eremite06 eremite06 is offline
Veteran member
Join Date: Dec 2006
Posts: 769
Thanks: 25
Thanked 22 Times in 13 Posts
Default

Thanks for this. I've been trying to convince some family members in law enforcement to take the DB pension. This will give me more ammo.....so to speak.
__________________
Born City of Brotherly Love. Penna. until '68, Florida since '73.
  #4  
Old 07-01-2011, 12:48 PM
DaleMN DaleMN is offline
Platinum member
Join Date: Dec 2010
Location: Brainerd, MN....TV soon I hope!!!
Posts: 1,756
Thanks: 0
Thanked 0 Times in 0 Posts
Default

The very best retirement plan possible is that the check for your funeral bounces.
  #5  
Old 07-01-2011, 01:08 PM
Bill-n-Brillo's Avatar
Bill-n-Brillo Bill-n-Brillo is offline
Sage
Join Date: Sep 2010
Location: Granville, OH.....and TV snowflakes!
Posts: 6,909
Thanks: 0
Thanked 0 Times in 0 Posts
Default

JMHO: The 'Summary' seems to, in part, push the premise that retirees should purchase an annuity. I would urge anyone to do a good bit of research into the pros and cons of annuities as they're not necessarily the best financial instrument for everyone - other options can be better.

Again, JMHO!

Bill
  #6  
Old 07-01-2011, 01:26 PM
2BNTV's Avatar
2BNTV 2BNTV is offline
Sage
Join Date: Mar 2010
Posts: 10,694
Thanks: 1
Thanked 102 Times in 39 Posts
Default

Quote:
Originally Posted by DaleMN View Post
The very best retirement plan possible is that the check for your funeral bounces.


Quote:
Originally Posted by Bill-n-Brillo View Post
JMHO: The 'Summary' seems to, in part, push the premise that retirees should purchase an annuity. I would urge anyone to do a good bit of research into the pros and cons of annuities as they're not necessarily the best financial instrument for everyone - other options can be better.

Again, JMHO!

Bill
Annuitites - I've had this discussion with a financial advisor and they are not right for everyone. JMHO
  #7  
Old 07-01-2011, 01:32 PM
l2ridehd's Avatar
l2ridehd l2ridehd is offline
Sage
Join Date: Dec 2007
Location: Bridgeport At Miona Shores
Posts: 3,516
Thanks: 1
Thanked 172 Times in 56 Posts
Send a message via AIM to l2ridehd
Default

Annuities are good for those who do not have the discipline to manage there own investments. If you have the ability and savvy to set up your own investments and withdraw a fixed amount every month not to exceed 4% annually of the beginning base, that is far better then any annuity I have every reviewed. But you need the capability to manage your own portfolio and the discipline not to withdraw more in a crisis or for a fun filled weekend in Reno.
__________________
Life is to short to drink cheap wine.
  #8  
Old 07-01-2011, 02:28 PM
railroadman railroadman is offline
Member
Join Date: Jun 2010
Location: CHARLOTTE, NC -NEXT TV
Posts: 93
Thanks: 0
Thanked 0 Times in 0 Posts
Default

I2ridehd:

You always have great ideas on investments and you do sound very savvy about investments.

Do you have any advice on MLP's?
  #9  
Old 07-01-2011, 03:00 PM
l2ridehd's Avatar
l2ridehd l2ridehd is offline
Sage
Join Date: Dec 2007
Location: Bridgeport At Miona Shores
Posts: 3,516
Thanks: 1
Thanked 172 Times in 56 Posts
Send a message via AIM to l2ridehd
Default

Hummmmmmmmmmm, MLP's? I assume you mean Master Limited Partnerships? Or the stocks and mutual funds that trade in them? Not Maui Land and Pineapple?

I have looked at them a few times and was going to do some testing on them, but the detailed information I like before investing is just not as easy to get as it is for stocks. I like investments I really understand, ones that are very liquid, and those that I can do easy research to understand the real value.

So no, I have not invested in MLP's or studied them enough to provide comments. There are so many really great stocks that are way under their target value price that I stay with those.
__________________
Life is to short to drink cheap wine.
  #10  
Old 07-01-2011, 05:46 PM
railroadman railroadman is offline
Member
Join Date: Jun 2010
Location: CHARLOTTE, NC -NEXT TV
Posts: 93
Thanks: 0
Thanked 0 Times in 0 Posts
Default

Thanks, I2ridehd:

You always give great information on investments and all items, concerning TV.

Thanks, again Randy

p.s. Time for me, to go drive the Train!!
  #11  
Old 07-01-2011, 05:59 PM
brostholder's Avatar
brostholder brostholder is offline
Veteran member
Join Date: Dec 2009
Location: Kingfisher Villas in Pennecamp
Posts: 604
Thanks: 0
Thanked 0 Times in 0 Posts
Default

Quote:
Originally Posted by railroadman View Post
I2ridehd:

You always have great ideas on investments and you do sound very savvy about investments.

Do you have any advice on MLP's?
I am fairly heavily invested in MLP's and have been for the last 4 years. They have performed very well for me and I average about 8.5% TAX FREE!!! The real nice part about them, is that even though my net worth can increase or decrease with market fluctuations, my income never changes. In fact, even during the "crash", none of the MLP's I owned cut their dividends. A few of them even increased dividends during that difficult time. What I have been doing recently is pulling some of my profits out of the MLP's and purchasing a very low cost annuity from Fidelity that pays me 5.8%. Ideally, I plan to purchase enough in annuities to cover all my fixed costs.
  #12  
Old 07-01-2011, 07:08 PM
angiefox10's Avatar
angiefox10 angiefox10 is offline
Sage
Join Date: Jan 2011
Posts: 2,627
Thanks: 6
Thanked 39 Times in 17 Posts
Default

Quote:
Originally Posted by DaleMN View Post
The very best retirement plan possible is that the check for your funeral bounces.
  #13  
Old 07-01-2011, 08:32 PM
Schaumburger's Avatar
Schaumburger Schaumburger is offline
Sage
Join Date: Apr 2010
Location: Schaumburg, IL - Chicago suburb - TV Wannabee
Posts: 4,235
Thanks: 693
Thanked 141 Times in 65 Posts
Default Suze Orman talks about retirement

Just heard a news snippet on ABC tonight. According to Suze Orman (don't know if she's always right or not) most people will no longer be able to retire at 62. 67 or 70 is more likely. I don't know what age group she was referring to. I only know that I won't be able to collect my full Social Security until 67. And I hope I will be a seasoned TV veteran by the time I collect my first Social Security check.
  #14  
Old 07-01-2011, 09:01 PM
Hal :-) Hal :-) is offline
Senior Member
Join Date: Jul 2010
Posts: 170
Thanks: 0
Thanked 0 Times in 0 Posts
Default

Quote:
Originally Posted by DaleMN View Post
The very best retirement plan possible is that the check for your funeral bounces.
I know it's humor. But it occurred to me it's quite the opposite of rubicon, who's concerned about his taxable estate. That's anything over 5 million single, 10 million joint today. If your funeral check bounces, I'm afraid your heirs will be on the hook. Unless you have a way to pass the check just before for you (pass).
  #15  
Old 07-02-2011, 05:55 AM
l2ridehd's Avatar
l2ridehd l2ridehd is offline
Sage
Join Date: Dec 2007
Location: Bridgeport At Miona Shores
Posts: 3,516
Thanks: 1
Thanked 172 Times in 56 Posts
Send a message via AIM to l2ridehd
Default

I always look for more then 8.5% to put my money at risk. I want a 15% annual return. And there are enough good companies whose stock is selling at a bargain to provide that. It takes some research and some work to identify them and to understand them, but the returns are worth the effort. I would rather own 4 or 5 really good stocks then some funds that spread them over 100's of stocks. Just my personal choice and not for everyone.
__________________
Life is to short to drink cheap wine.
Closed Thread

Thread Tools

You are viewing a new design of the TOTV site. Click here to revert to the old version.

All times are GMT -5. The time now is 04:08 PM.