Through the Senate Special Committee on Aging, U.S. lawmakers and regulators have been conducting hearings focused on retirement security issues.
The hearings are a follow-up to a recent request for comment on the same topic from the U.S. Labor and Treasury Departments.
Longevity risk is a fundamental concern that appears to be driving both the request for comment and the Senate hearings.
Lawmakers are legitimately concerned about the fact that millions of U.S. retirees will either have insufficient funds or simply run out of savings during retirement.
According to one testimonial:
Most American households at or near retirement “are consumed by fear...Instead of walking on the beach hand-in-hand in retirement, the reality is that they’re sitting around the kitchen table cutting coupons.”
Some of the facts supporting the testimony and concerns include:
- 47 percent of those on the verge of retirement are predicted to run out of money as they will not be able to cover their basic expenses and uninsured healthcare costs.
- The average 401k balance as of March 31 was $66,900.
- The average monthly Social Security benefit as of April was $1,067.
- Current life expectancy for a 65 year old U.S. male is 82. For a 65 year old U.S. female it is 85.
- In 1983, 62 percent of U.S. workers had only a company-funded or traditional defined benefit pension plan, while 12 percent had 401ks.
- In 2007, 17 percent of U.S. workers had only a company-funded or traditional defined benefit pension plan, while 63 percent had 401ks.
Source: Bloomberg Business Week
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