Retirement and 401k News

Retirement in Brief: The Latest News and Research

November 25, 2019 –  Barron's

 

Lifetime income is one of the hottest topics in the retirement industry at the moment, as it becomes clearer that the wave of baby-boomer retirees has done well with the accumulation of assets but could use a little help on the drawdown.

Here, Barron's latest roundup of news and research to help readers make informed decisions and gauge their relative retirement readiness

Social Security Launches Fraud-Reporting Tool

The Social Security Administration this past week unveiled an online form to document reports of Social Security-related scams, calling on the public to help stem what has become the No. 1 type of reported fraud.

To combat these scams—in which fraudulent callers mislead victims into making cash or gift card payments to avoid arrest for purported Social Security number problems—the agency will analyze the data for trends and commonalities.

Potential victims are urged to use the new online form to report Social Security phone scams including robocalls and live callers, as well as email, text, and in-person scams. The form allows people to create a personal identification number, so they can verify the legitimacy any follow-up call about a report.

While Social Security employees do occasionally contact people, the agency said they will not: tell you that your Social Security number has been suspended; contact you to demand an immediate payment; ask for credit- or debit-card numbers over the phone; require a specific means of debt repayment, like a prepaid debit card; demand that you pay a Social Security debt without the ability to appeal; or promise a benefit approval, or increase, in exchange for information or money.

If there is a problem with a person's Social Security number or record, in most cases Social Security will mail a letter. If a person needs to submit payments to Social Security, the agency will send a letter with instructions and payment options.

Survey: Americans' Retirement Income Expectations Don't Reflect Reality

American investors think they can withdraw 10.1% of their retirement savings each year on average and not run out of money, a finding that indicates people are underestimating how long they'll live or underestimating the returns required to draw down savings at that rate.

The figure, from the third phase of Schroders’ Global Investor Study 2019, is more than 6 percentage points above what has long been considered a safe withdrawal rate in retirement of 4%. Even that 4% figure is being reconsidered in light of longer life spans and new research on the impact of down market years on the durability of workers’ retirement savings.

The survey also found that 21% of non-retired people aren't comfortable that they are saving enough to last throughout retirement, along with 15% of people who are already retired.

"These findings indicate that a significant mismatch exists between how confident people are with their savings ahead of retiring and the amount they expect to draw upon once they have retired," said Sangita Chawla, Schroders's head of retirement savings. "This disconnect is worrying and implies that people globally are not being realistic about the lifestyle they want to enjoy when retired.."

The survey, which polled over 25,743 investors across 32 countries, was conducted in April.

The Closer You Are to Retirement, the Less Prepared You Think You Are, It Seems

More than half of American workers, or 52%, say they’re behind where they should be in saving for retirement, according to a new study by Bankrate.com.

Of more immediate concern is that even higher percentages of those closest to retirement say they're not prepared: 57% of younger boomers (ages 55-64) and 63% of Generation X (ages 39-54).

"Getting your retirement savings on track begins by fully utilizing your tax-advantaged retirement savings options such as a workplace 401(k) and supplementing that with an IRA," said Bankrate's chief financial analyst, Greg McBride. "The best time to start is 'today,' and the worst time to start is 'someday.'"

The Bankrate survey of 2,697 adults was conducted Oct. 23-25.

Overall, the survey found that just 16% say they are right on track, and 11% feel they are ahead of where they should be in terms of saving. An additional 20% of respondents say they don't know if they're on track or not.

One big reason for the shortfall? About 38% of U.S. workers have never had a retirement account, the survey found.

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