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Retirement Readiness: A Framework and Prospects for Future Improvement

Retirement Readiness: A Framework and Prospects for Future Improvement. ASEC Partners Meeting. ASEC General Partners Meeting October 20, 2010 Don Ezra. Don Ezra ASEC Fellow. October 20, 2010. Think of several “wealth zones”. Continue to accumulate.

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Retirement Readiness: A Framework and Prospects for Future Improvement

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  1. Retirement Readiness: A Framework and Prospects for Future Improvement ASEC Partners Meeting ASEC General Partners Meeting October 20, 2010 Don Ezra Don EzraASEC Fellow October 20, 2010

  2. Think of several “wealth zones” Continue to accumulate Enough to annuitize or support lifestyle Enough to annuitize or support essentials

  3. EBRI findings for the Essentials Zone • Early Baby Boomers: 47% won’t attain the ceiling • Late Baby Boomers: 44% • Gen Xers: 44% • An improvement of 12 percentage points in seven years • Lowest one-third by income: 70% • Middle one-third: 42% • Top one-third: 23%

  4. How much will it help to save more? • Early Baby Boomers, lowest income group: more than 25% of pay needs to be added to annual saving, to bring failure rate down to 50% • Above-median income groups: additional 10% of pay saved would raise success rate above 90% • And some don’t need to save any more at all • Auto-enrollment and auto-escalation features in DC plans are enormously powerful, particularly for those with 30-40 years of future saving • Lower-income: reaching post-retirement target of 80% of pre-retirement income (preserved in real terms): 46% success improves to 79% • Higher income: 27% improves to 64%

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