retirement planning

Warren Buffett does not need to think about an annuity.  While Buffett’s age may qualify him for annuity consideration, his wealth is sufficient to fund any personal income needs that may arise.  Also, concerns such as longevity risk and sequence of returns risk are non-issues for him.

A recent article on retirement planning discusses the profound impact that health events can have on retiree assets.

A retirement income study by the National Bureau of Economic Research indicates that the association between health and retirement assets is "striking:"

Morningstar's Director of Personal Finance writes about the factors that are within an individual's control and therefore manageable through good planning.

The economy and stock market movements are not on the list.

Prudent risk management in retirement is on the list.  The items that fall into the risk management category include:

• Longevity risk.
• Long-term care.
• Inflation.
• Regulatory risk and higher taxes.

Longevity annuities are discussed in the context of longevity risk.

Two industry-leading consultants have published a study that compares a range of wealth management strategies that are available to individuals in retirement.

None of the strategies are dominant on an overall basis, but certain approaches show clear strengths in terms of income generation, levels of wealth, and the impact on bequest motives.

The dramatic impact of product fees is also addressed.

Six different retirement strategies are discussed:

This past weekend President Obama discussed his "common sense" steps to reform and simplify the system of retirement savings in the United States.

President Obama seeks to extend incentives and simplified savings vehicles to the 78 million Americans who do not have access to a retirement savings plan through their employer.

Some of the President's proposed changes include:

John Bogle thinks that the notion of leaving an inheritance is nice but certainly not essential.

The Vanguard founder suggests that paying attention to one's personal finances and standard of living in retirement trumps the bequest motive since adult children should be able to take care of themselves:

A significant portion of U.K. workers over the age of 55 are modifying their retirement plans in light of the recession and financial crisis.

A study by U.K. retirement specialist MGM Advantage found that 1.85 million near-retirees are planning to work longer than expected in hope of repairing their pensions and personal finances.

The study also revealed:

A not for profit coalition of organizations known as Americans for Secure Retirement has published an interesting summary of an Ernst and Young study that focuses on the impact of longevity risk on middle-income Americans.

The Retirement Vulnerability Index is an interactive map that provides state-level summaries of the data from the Ernst and Young Study.

The following results are displayed for each state:

Life settlement sales made by seniors have doubled over the past two years to $11.8 billion.

The financial crisis appears to have had an impact on sales as seniors are likely looking at all of their assets for sources of funds and liquidity.

Experts do caution, however, that there are other ways to realize the value of a life insurance policy that do not involve loss of life insurance coverage:

Reverse mortgages and annuities share some key similarities:

• Both financial vehicles have the potential to provide stable sources of income to retirees.  
• Reverse mortgages and annuities both suffer from relentlessley negative coverage in popular financial media.
• As a result, reverse mortgages and annuities are largely misunderstood.

Objective information and commentary are hard to come by.