CHANGE MY LOCATION
Business
Examiners
Business Examiner
Most Recent Post
Wells Fargo likely to unload Wachovia investment bank division
Internet Business Examiner
Most Recent Post
Digression: YouTube video isn't a commercial but could be
California News
Multimedia News
Study shows majority of Maryland retirees will outlive assets
SEE THE LATEST ON THIS STORY
Related Topics: BALTIMORE
BALTIMORE (Map, News) - Almost three out of five middle-class new retirees in Maryland will likely outlive their financial assets if they try to maintain their pre-retirement standard of living, a new study reports.
The study, conducted by Ernst & Young on behalf of Americans for Secure Retirement, also finds that new retirees in Maryland would have to cut back their standard of living on average by 20 percent to reduce the likelihood of outliving their assets to only a 5 percent failure rate.
With fewer workers having guaranteed sources of retirement income, like pension plans, households approaching retirement in Maryland face increased longevity, investment and inflation risks.
“Many Americans envision a retirement where their lifestyle continues much as before,” said Tom Neubig, the study’s author. “Our work shows that this is not a realistic expectation and that, with the current state of savings and potentially very long life expectancies, many retires will have to cut back far more on expenditures than they had ever expected.”
Those Marylanders seven years out from retirement are even less prepared, as almost three-quarters of Maryland residents near retirement can expect to outlive their assets, according to the study.
Near retirees would have to reduce their standard of living on average by 33 percent to reduce the likelihood of outliving their money.
“Our concern is that people underestimate how much they need to save,” said Joe Reali, chairman of Americans for Secure Retirement. “We have a retirement crisis in this country.”
The study finds that retirees are better prepared to have a financially secure retirement if they have a guaranteed source of retirement income beyond Social Security, such as an annuity or defined benefit plan.
Reali endorsed The Retirement Security for Life Act, legislation currently before Congress, which would encourage Americans to have a steady source of guaranteed income in retirement by providing a tax incentive for lifetime annuities.
The legislation would exclude 50 percent of the income received from a lifetime annuity from taxation, up to $20,000 per year. For an average American taxpayer in the 25 percent tax bracket, this would result in $5,000 of tax savings.
“Life annuities are the only vehicle besides pensions and Social Security that provide a steady stream of income for life — a ‘paycheck for life,’ ” Reali said.
acannarsa@baltimoreexaminer.com
Comments from Examiner Readers
1:59 PM MST on Thu., Jul. 31, 2008 re: "City faces $2.9 billion gap in retiree health benefits"
Report as inappropriate
8:01 AM MST on Mon., Feb. 25, 2008
re: "Howard considering trust fund for retiree benefits obligation"
Report as inappropriate
7:11 AM MST on Sat., May. 26, 2007
re: "More than $10M set aside for retiree benefits"
Report as inappropriate
5:58 AM MST on Fri., Apr. 20, 2007
re: "More than $10M set aside for retiree benefits"
Report as inappropriate
Examiner Reader said:
Oh sure, raise my taxes. It doesn't matter that I have no retirement plan. That I have worked since I was 16 years old, not including babysitting when I was younger that 16. All the hardworking state employees, I say hard working because I see them napping in yellow trucks, deserve a big fat retirement check. And the city employees, with all the hard work they do by shopping using city credit cards is tiring. They deserve it also! Take my money, what little I have left.
0 agree | 1 disagree
Vote on this comment: I agree or I disagree
Not surprised said:
Retirement should be in 401K plans. With the county and the employee contributing. Then there would be no unfunded liability!
32 agree | 23 disagree
Vote on this comment: I agree or I disagree
Examiner Reader said:
Baltimore County's website makes no mention of a 5 % penalty , nor does it tell you how they aren't finish yet... if this information is true then employees who have been loyal and hard working are to be pusished for their committment. If the Administration and Council and Govenment on all levels really are so worried about the system , then perhaps they should show how much they care about all of their constituens out here in the communities it by reaching into thier own retirement systems/pockets and pay into the Social Security System. and Retirement system and cut their pays.. Excuse me, but it would seem that we have elected people who have no problem taking pensions from workers who are the backbone of the entire system....yet..pay nothing themselves... I think that perhaps it may be time that government "for the people" replaces "by the people" with "real people."
159 agree | 150 disagree
Vote on this comment: I agree or I disagree
Examiner Reader said:
Howard County's approach to funding their retirement liability is not being done by ravaging the current employee's retirement as Baltimore County Executive Jim Smith is trying to do. They also have a Spending Committee evaluating the financial impact. Baltimore County did not have the pension system evaluated prior to proposing the radical changes to the current retirement system.
172 agree | 151 disagree
Vote on this comment: I agree or I disagree