Retirement Planning

Retirement Planning

Introduction

Since traditional pensions are rapidly disappearing, American workers increasingly need to take responsibility for their own retirement savings, usually through a 401k, an IRA or a similar tax-preferred investment. Social Security will probably still be around, but for most people Social Security will provide only for bare minimum needs in retirement. Workers with extremely tight incomes may need to rely on Social Security alone, but anyone with money to spare should be stashing some away for retirement. Personal investment is the key to painting a retirement picture that is sunny and colorful, rather than gloomy and dull.

We live in an era marked by periods of economic uncertainty and volatility. At the same time increased responsibility has shifted to individuals for securing their financial wellbeing in retirement. And with this added responsibility, retirees may be exposed to a variety of risks that can affect them both as individuals and members of society.

Recognizing this growing trend towards individual responsibility and the risks that may be encountered, the Society of Actuaries (SOA) launched a broad research and information effort in the late 1990s to raise awareness of post-retirement challenges and seek ways to address them. As part of this ongoing effort, the SOA published an informational chart in 2003 that explained the risks of retirement and served as an educational tool to help individuals prepare for them. In everyday language, the chart provided a comprehensive summary of the risks and complemented other retirement planning material.

With the passage of time, the creators of the original chart recognized there would be value to updating it with insights into recently introduced products, legislative changes and new issues confronting retirees. As a result, the SOA is pleased to make available this new version.

In the following pages you'll find discussions of key financial risks that individuals ...