Given Up Hope on Retirement?

Given Up Hope on Retirement?
Newsweek

http://www.newsweek.com/id/215868&ct=ga&cd=sGppdOACJMU&usg=AFQjCNHR5nGtzlbxNw-FIOFz4YY-LkS6vw

September 2009 cover story for Plan Sponsor

Indeed, some say typical income-replacement tools may underestimate people’s needs. The models do not fully account for such crucial factors as investment risk, longevity risk, and catastrophic health-care cost risk, VanDerhei says. “In a lot of cases, that 75% to 80% [replacement ratio] is way, way too low if you want even a 75% chance of having enough money,” he says. He developed the Ballpark E$timate Monte Carlo model for EBRI that aims to give people a sense of what income-replacement rate they need to have a 50%, 75%, and 90% chance of being able to cover their basic expenses in retirement. A single rule-of-thumb does not work, he and others say, given the variability in individuals’ situations. “A lot of models just use an average: average expected returns, average life expectancy,” he says. “If you think about it, they are saying, ‘This is how much you need to have a 50% chance of not running out of money.””

http://www.plansponsor.com/magazine_type3/?RECORD_ID=44531&page=1

An Evaluation of the Adequacy and Structure of Current U.S. Voluntary Retirement Plans, with Special Emphasis on 401(K) Plans

Abstract:
This paper reviews the results of many empirical and simulation studies EBRI has undertaken to determine whether future cohorts of retirees in the US are likely to have retirement income adequacy and the extent to which the voluntary retirement system is contributing to this objective in its current form as well as possible modifications that may increase its efficiency.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1474865

The Declining Role of Private Defined Benefit Pension Plans: Who Is Affected, And How

Excerpt: "Using an empirical distribution of enhanced contributions to DC plans from sponsors freezing their DB plans, we simulate the nominal annuity that could be purchased at retirement age from these enhanced contributions. We then back out the net pension loss experienced by employees in the future."

http://www.pensionresearchcouncil.org/publications/document.php?file=811