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How the Financial Services Industry Sees Retirement Readiness – The Financial Preserve from Lonier Financial Advisory LLC
Conscientious Financial Planning and Retirement Income Management | 201-741-9528
from Lonier Financial Advisory LLC, Osprey, FL

How the Financial Services Industry Sees Retirement Readiness

How the Financial Services Industry Sees Retirement Readiness

January 27 Market Watch Retirement Weekly quotes these large financial services company executives on the state of retirement:

[list style=”orb” color=”blue”]

  • David Deming, Dimensional Retirement (Dimensional Funds): “First, we need to move the eligible age for Social Security payments to 69…Another beneficial change would be to alter the current  [FICA taxable] income limits from $100,000 to $250,000…We should consider a system recently implemented in the U.K. where every citizen is required to save a per- centage of their income into a 401(k)-type vehicle.”
  • George Castineiras, Prudential Retirement: “The costs of administering a plan and the fiduciary liability involved are simply too great for many potential plan sponsors to take on and employees are overwhelmed by their increasing responsibility for retirement [planning]…Lost in the shift is the protection against investment and longevity risk, and the efficient pooling of those risks across large numbers of participants…involves putting participant deci- sions on autopilot. That means auto enrollment, auto escalation, an auto investment strategy, and auto retirement income.”
  • Ken Crain, BoA Merrill Lynch: “We see employers more engaged today in ensuring that their employees are successfully utilizing their benefit plan programs, whereas in the past more was left in the hands of employees…Some tangible measures of the system being more successful is a 21% increase in the use of auto increase and a 14% increase in the use of auto enrollment among 401(k) benefit plan sponsors in 2011.”
  • Cynthia Egan, T. Rowe Price Retirement Plan Services: “Lower income earners, those who are not covered by a defined contribution plan, as well as “weak savers” are going to be highly reliant on Social Security. It is what it is — so we must ensure the stability and reliability of the Social Security program for the future….Almost half the workforce does not have access to employer sponsored programs…We need to incent the smaller employer to make it happen and keep it simple for them…More people need to understand the benefits of saving, the basics of investing and the importance of managing personal debt. Millions do not take full advantage of the programs available to them.”
  • Larry Fink, BlackRock: “There is no question in my mind that retirement and the underlying demographics represent the defining global asset management challenge of the next 10 to 20 years…Businesses and pension funds have been shifting the responsibility and risk of retire- ment savings to workers in the form of defined contribution plans. But those individuals are often not equipped to meet the complex demands of retirement funding.”
  • Michael Falcon, J.P. Morgan Asset Management: “We have to help plan sponsors increase participation in plans and we need partici- pants to start saving significantly more (ideally 12%-15% of their income rather than the 6% that many are saving today) and start saving much earlier and more consistently. Sponsors need to guide participants to professionally managed solutions, like target date funds, and dramatically simplify core menu options so that participants will engage and invest appropriately.”
  • Karen Wimbish, Wells Fargo Institutional Retirement and Trust: “Americans simply are not saving enough for retirement!…The shift of retirement responsibility from company sponsored pensions to defined contributions and overall shift of responsibility to the individual went by without people/ government thinking about it. Those unemployed are unable to save and borrowing from 401(k)s/using savings to live on. They won’t be able to catch up on saving for retirement. Unemployment has longer lasting implications for the retirement industry”
  • Brett Hammond, TIAA-CREF: “People are living longer than ever before — people 85 and older are the fastest growing segment of Americans. This is taking place as savers are still dealing with the effects of the worst financial crisis since the Great Depression. The 401(k) was never designed to be the primary retirement tool in America. It evolved that way as businesses pulled back on their defined benefit plans. The 401(k) has some benefits: it is portable. But many investors don’t use it the right way — they fail to participate, fail to take advantage of the employer match or don’t have an appropriate asset allocation. We need to make sure retirement plans enable people to achieve guaranteed in- come for life, through an annuity option, for example.”
  • Michael Shamrell, Fidelity Investments: “Studies have shown that the primary way that most Americans save and invest is through their workplace savings plan, so retirement savings guidance, information and tools play a critical role in helping workers make the best possible decision and will help them realize their retirement savings goals.”


Hopefully, this gives you a better sense of what those who run large businesses profiting from your need to invest for retirement think about the current situation.

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