Report Finds Americans are Unprepared for Retirement

According to Standard & Poor's chief economist David Wyss, the lack of saving has helped keep economic growth positive but will make it more difficult for older Americans to finance their retirement. Most Americans also continue to rely on the government to provide for their retirement. Mr. Wyss noted that although they say they're unsure about future Medicare and Social Security benefits, they're doing little to increase their wealth before retirement.

"One solution is likely to be more post-retirement work as more retirees seek a so-called bridge job in early retirement," said Mr. Wyss. "Unfortunately, health and labor market conditions often prevent even those who intend to work from doing so. In addition, in a weakening economy, bridge jobs could be harder to find," he added.

Moreover, only 37% of Baby Boomers who are about to enter into the post-employment world have a traditional pension coming from their employer. That's down from 60% in 1983.

In addition, the shift to defined-contribution pensions -- the most common types of which are 401(k)s, IRAs, and 403(b)s -- from traditional defined-benefit ones has had mixed results. On the plus side, the percentage of households with no pension coverage has declined slightly, to 34% from 37% in 1983. However, in 2004, the median 401(k) plan for people in the 55 to 64 age group was worth only US$60,000 -- not enough to provide for much of a retirement. (In 2006, the average 401k balance for people in their 60s was $157,727.)

Mr. Wyss explained that the other problem for the near-retired is the poor performance of the asset markets in recent years. The S&P 500 will have its worst decade since the Depression if it closes below 1469 at year-end 2009. "Retiring in a period like such as this strains assets in the best case, and this is far from the best case," noted Mr. Wyss. "Asset values have been declining, while saving rates have hovered near 0%, and if older workers aren't adding to their wealth and if their asset values are falling, the prospects of a comfortable retirement are receding. The average household had wealth equal to 558% of after-tax income at year-end of 2007, down from 569% a year earlier and 618% at the market peak in 1999," he concluded.

The teleconference to discuss these issues is at 10:00 a.m. EDT on Wednesday, May 21. In the U.K., the dial-in number for this teleconference is (44) 20-7108-6390, and the number for everywhere else is (1) 210-795-0624. The Conference ID is 4804379, and the passcode is SANDP.

Standard & Poor's, a division of The McGraw-Hill Companies (NYSE: MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data. With approximately 8,500 employees, including wholly owned affiliates, located in 23 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com.

SOURCE Standard & Poor's

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