Retire2Enjoy : Retirement Risk Index, Retirement Plan Trends, Americans Cashing In the 401(k), HRS Receives Stimulus Money

Cashing In the 401(k)

Business consultant Hewitt Associates has looked at the behavior of 170,000 401(k) participants who left jobs last year. The review shows that 46 percent of those changing or losing their jobs took the cash out of their accounts. A quarter of the workers either rolled over their money to individual retirement accounts or other retirement plans, and about a third kept the money in their previous employers 401(k) plans.

A Rise in the National Retirement Risk Index

A new update of the National Retirement Risk Index (NRRI) quantifies the impact of the recession of 2008 and 2009 on retirement readiness for households across the United States. The Center for Retirement Research at Boston College has released an update of the NRRI that shows a seven percentage-point drop in the share of households that are positioned to maintain their current standard of living in retirement. The results: 51 percent of Americans are not prepared to retire at age 65 compared to 44 percent in 2007.

Health and Retirement Study (HRS) Receives Stimulus Money

The University of Michigan Health & Retirement Study (HRS), conducted by the U-M Institute for Social Research, has been awarded four grants totaling more than $19 million over the next two years. The awards are part of the American Recovery and Reinvestment Act funds.

Now in its 17th year, the HRS follows more than 22,000 people over the age of 50 every two years. It collects data from pre-retirement to advanced age. A major goal of the study is to help provide data to inform scientific and policy regarding the nation's aging population.

Retirement Plan Trends vis-a-vis the Healthcare Market

A study, Retirement Plan Trends in Today’s Healthcare Market – 2009, has been  conducted by Diversified Investment Advisors, Inc. and the American Hospital Association (AHA).

Conclusions include:

* Plan sponsors offering a 401(a) plan increased to 31% from 25% in 2008. The number of 401(a) plans had remained flat since the 2005 iteration of the survey.

* 59% of plan sponsors that currently offer a defined benefit plan do not expect to make any additional changes to their plan in 2009.

* Plan sponsors eliminating (4%) or reducing (8%) the employer contribution to their defined contribution plans are in the minority.

* Many plan sponsors maintain multiple defined contribution plans. In fact, 77% of healthcare plan sponsors surveyed offer a 403(b) plan, the most prevalent defined contribution plan; 62% offer a 457(b) plan, and 41% offer a 401(k) plan.

* 11% of plan sponsors currently offer a Roth 403(b) plan, a three percentage point increase from last year.

* The vast majority (86%) make employer contributions to their defined contribution plans, with matching contributions being the most prevalent method (71%).

* Improving employee education remained a top priority for 72% of plan sponsors.

Changing Retirement Dreams

A Watson Wyatt survey shows a significant number of U.S. workers are adjusting their planned retirement age in response to large losses in their retirement savings. More than half of those aged 50 or older indicated they will work at least three years longer than previously expected with decline in the value of their 40i(k) accounts cited as the most important reason for postponing retirement.

The survey also shows that workers who participate in a defined contribution-only plan are more likely to delay retirement than those with a defined benefit plan.

Retirement Money in Motion

Mercatus LLC and Financial Research Corporation (FRC) today announced the release of a new study entitled Retirement Money in Motion: Capitalizing on IRA, Rollover & Taxable Money Movement. Based on a comprehensive national survey of more than 2,000 mass affluent consumers, the study examined these individuals' recent retirement asset transfers. Analysis data showed that, contrary to popular opinion, mass affluent consumers were not passive during the difficult financial environment of 2008 - 2009. Rather, they moved significant amounts of retirement money, including taxable assets, over the past year, in search of better value, personalized advice and guidance, and a financially sound provider.

Other key findings include:

    --  The desire to consolidate accounts was the number one driver of

        Retirement Money-in-Motion decisions

    --  Financial soundness perceptions drove one-third of

        retirement money movement decisions

    --  Prior to age 65, the frequency and size of money movements generally

        increased with experience and income

   --  Personalized investment advice, provided in-person, was a critical

        driver of retirement money movement decisions.

Responsibility

The Canadian government has come out insisting that individual Canadians must take more responsibility for ensuring they have enough money to live on during retirement as part of any effort to revamp existing pension options. “My philosophy is that we need to be responsible for ourselves,” a government spokesperson said in an interview with Canwest News Service and Global Television.

 Big Sky Reforms

The Montana State Administration and Veterans' Affairs Interim Committee of the Montana Legislature is studying reforms to the state's public retirement systems.

Growth in Retirement Assets

U.S. Retirement assets rose $1.0 trillion in the second quarter of 2009. By the end of the quarter, Americans held $14.4 trillion in retirement assets. These assets account for 34 percent of all household assets in the United States.

More Hearings in Washington

The Senate Health, Education, Labor and Pensions Committee is conducting a hearing on “Pensions in Peril: Helping Workers Preserve Retirement Security through a Recession.”