Mark J. Warshawsky is Director of Retirement Research at Towers Watson.

Dr. Warshawsky served as assistant secretary for economic policy at the U.S. Treasury Department from 2004-2006 and he has held senior level economic research positions at the Federal Reserve Board, the Internal Revenue Service and TIAA-CREF.

The Society of Actuaries (SOA) just published a series of short whitepapers or “briefs” that focus on some of the major decisions that are encountered by retirees.

This is a great resource for consumers who are seeking objective content produced by experts.

The Society has clearly made efforts to create content that is accessible to a non professional audience.  The briefs are clear, short and focus on consumer-relevant topics such as “when should I retire.”

There are 11 briefs, and the topics include:

The Treasury Department just released a proposed set of regulations that could have a meaningful impact on the retirement income market in the U.S.

The Treasury’s guidance package builds on feedback received in response to the request for comments issued by the Labor and Treasury Departments last fall.

The proposed regulations appear to be squarely focused on longevity risk.  The basis for this concern—particularly as it pertains to the middle class—is summarized in the following chart:

Congress is considering an alternative inflation measure as part of its deficit reduction initiatives.

The alternative inflation measure is known as the chained consumer price index or chained CPI.  The chained CPI includes an adjustment mechanism that presumably accounts for consumers switching to substitute goods and services when a similar category of goods or services experiences rapid price increases.

The overall result of this adjustment for substitutes is a price index that that increases at a slower pace than other price indexes such as the CPI-W or CPI-U.

A price index such as the consumer price index (CPI) is intended to provide a rough gauge of the general direction of prices in the economy.

An increasing consumer price index represents price inflation while a decreasing price index may provide an indication of deflation.

The first Social Security cost of living adjustment (COLA) since 2009 will go into effect in January 2012.

Social Security beneficiaries will receive a 3.6 percent cost of living adjustment beginning in January.  This 3.6 percent increase is equivalent to an average of $43 per month for each program participant.

This is welcome news to 55 million program beneficiaries—many of whom are largely reliant on Social Security.

After the increase, the average monthly Social Security benefit will be $1,229.

At the request of Wisconsin Senator Herb Kohl, the Government Accountability Office (GAO) just released a study that provides an assessment of the current state of the retirement income market in the United States.

For those interested in retirement income, the study is full of interesting data and conclusions.  Some of the highlights include:

What options are available to a soon-to-be retired household that is financially constrained?  What levers can be pulled if desired retirement spending is not realistic in light of retirement savings?

Previous articles in this series discussed the financial profile of William--the head of the typical American household that is approaching retirement.
 
We concluded that it is very unlikely that William will be able to sustain a retirement spending rate that is based on 85 percent of his pre-retirement income.

Roughly 10,000 Americans will retire each day for the next nineteen years.  Many millions of these retirees will have financial profiles that are considered statistically average.  

What, exactly, does it mean to be financially average, and what might retirement look like for the average person or household?  How might the financial aspects of retirement play-out for you, your parents, or your family and friends?