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Inflation Raises Retirement Concerns for Boomers
By
Michael A. Piekarz
Staff Writer
The
combined risks of outliving their assets, the loss of a spouse,
a decline in functional ability and rising healthcare costs are causing
more concern to the nation’s 78 million baby boomers than other
segments of the American population, according to a recent
study by the Society of Actuaries (SOA).
The SOA report, “Risks and Process of Retirement Survey,” identifies
concerns raised by pre-retirees and the newly-retired about inflation and the
volatile economy. The report concluded that pre-retirees and retirees are being
hardest hit by inflation.
Other concerns included not having enough money to pay for long-term care and
adequate healthcare combined with the challenges of maintaining a reasonable
standard-of-living after the loss of a spouse.
“Today’s retirement environment is much more complex than it has
been for previous generations,” said Anna Rappaport, Fellow of the Society
of Actuaries (FSA), MAAA, chair of the Committee on Post-Retirement Needs and
Risks and leader of the report’s project oversight work group.
The report suggests individual strategies such as personal health and wellness
commitments and long-term care insurance to cover the cost of seniors with long-term
care needs. Other recommendations included methods of maintaining adequate healthcare
using medical insurance and Medicare supplements.
“With generally acknowledged gaps in many employees’ retirement benefits
and resources, actuaries are helping people understand the risks associated with
retirement and the importance of sound management of their retirement funds,” Rappaport
concluded.
“With life expectancy reaching the highest level ever, there is a real
possibility that those in retirement may outlive their assets,” said Steve
Vernon, FSA, MAAA, and president of Rest-of-Life Communications.
The report found that men and women perceive retirement risks differently, and
they are affected in different ways. Women have more concern than men that inflation
will significantly impact their retirement resources. The differences were greater
for women who have suffered the loss of a spouse.
“For retirees living on a fixed income, the longer the period of retirement,
the greater the impact of inflation,” said Rappaport. “For this reason,
women are more adversely affected by inflation than men because of their longer
life expectancy.
“Traditionally, women have been younger than their husbands; therefore
periods of widowhood of 15 years or more are not uncommon. For many women, the
death of a spouse is accompanied by a decline in standard-of-living,” Rappaport
concluded.
To address concerns raised by women, the study suggested the use of income-producing
investment strategies such as joint survivor annuities and life insurance.
The study and report are part of the SOA’s Retirement 20/20 initiative
that began in 2006. Retirement 20/20 will analyze the retirement landscape with
the goal of developing a new retirement system different from the traditional
defined benefit and contribution plans.
This page and its contents ©2008
Metropolitan News Company, Inc.
