economy, income, protection, retirement, risk management

Closing the Retirement Savings Gap

A new report from World Economic Forum shows that retirees could outlive their savings by a decade or more due to higher life expectancy. “Women should prepare to bear the brunt of such shortfalls, going without retirement savings for at least two years longer than their male counterparts.” (3)

“The size of the gap is such that it requires action,’ says report co-author Han Yik. (1)

The report shows men in the US have a retirement savings gap of 8.3 years. The report shows that women in the US have an average 10.9 year gap between what they have saved and what they will require due to increased longevity.

This is a serious issue in other developed nations as well such as the United Kingdom, Canada, Australia and the Netherlands. In Japan the problem is even more acute with men having a gap of 15 years and women’s gap being nearly 20 years. (3)

This situation has become even more urgent because of the COVID pandemic. “In March and April (of 2020), women accounted for 55% of the job losses.” (5) As people returned to work in the US following lockdowns, women have not returned to work in the same number as men. The workforce participation rate for men in October 2021 was 67.6, while the rate for women was 56. This employment gap will continue to affect the earning and savings ability for women. (6)

 “Couple that with the disproportionate impact of job losses on women during this pandemic, and it could have a devastating economic impact on families, as well as women’s long-term earnings and career advancement.” (5)

The WEF report states “older individuals are going to need a more diverse range of financial tools to help protect against longevity risk.” (1)

“Several studies/ research papers have found that when faced with the complexity of the retirements landscape, people were prone to “switch off” and defer decision-making or simply chose the path of least resistance.” (2)

“With populations around the world living longer than ever before, we need far more creative decumulation solutions for longevity protection” says Rich Nuzum, President, Wealth at Mercer. (3)

“In order to effectively address the growing retirement savings gap, it is also critical to optimize the investment of these savings to enable individuals to achieve good retirement outcomes with the money they have invested.” The study explains,” A good retirement outcome provides a person with adequacy (a retiree’s needs are provided for), is sustainable (the risk of outliving one’s savings is low) and is flexible (allows individuals to respond to life events).” (2)

Based on these assumptions alone it is clear that as we approach retirement, we need to identify strategies that will help us manage these risks in retirement. How can we keep up with inflation, make sure we don’t outlive our money, and create a guaranteed income stream?

For savers and retirees, variable annuities can help provide guaranteed retirement income. These types of annuities create a lifetime guaranteed income stream while giving the investor the ability to stay invested in the market. If the market declines, they will continue to get their stream of income. *

By contrast, it’s possible that someone invested in the market without such guarantees, drawing income and experiencing a down draft in the market they may find themselves running out of money during retirement.

This fear, running out of money during retirement, is people’s number one fear according to several recent studies. (4)

If you want to create a secure retirement income while investing in the market, please reach out to me to discuss options that can help you protect your lifestyle regardless of what happens in life. Email me at james.cox@ffgadvisors.com

Retirement Income. Tax Efficient Planning.

Life Insurance. Disability Insurance

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To learn more contact:

James Cox

Cell: 267 323 6936

Email: james.cox@ffgadvisors.com

First Financial Group Advisors 744 W Lancaster Av Suite 235 Wayne, PA 19087

The opinions expressed here are those of the author and not necessarily that of Guardian/Park Ave Securities.

*Optional riders available at additional expense

Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. Links to other sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents, and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services, and make no representation as to the completeness, suitability, or quality thereof. All guarantees are backed by the strength and claims paying ability of the issuing insurance company. Variable annuities are long term investment vehicles designed to help investors save for retirement and involve certain contract limitations, fees, expenses, and risks, including possible loss of the principal amount invested

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 7101 WISCONSIN AVENUE SUITE 1200 BETHESDA, MD 20814. 301-907-9030. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Devon Financial Partners, LLC is not an affiliate or subsidiary of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation

2021-129238  exp 11/2023

  1. https://finance.yahoo.com/news/retirees-across-world-outlive-savings-155956574.html
  2. http://www3.weforum.org/docs/WEF_Investing_in_our_Future_report_2019.pdf
  3. https://www.weforum.org/press/2019/06/retirees-worldwide-will-outlive-their-savings-by-a-decade-and-women-will-fare-worse/
  4. https://jamesacox.com/2018/06/22/how-to-set-up-guaranteed-retirement-income/
  5. https://www.bloomberg.com/news/articles/2020-06-03/coronavirus-is-disproportionately-impacting-women?sref=qbSjPdv
  6. https://fred.stlouisfed.org/series/LNS11300002