Data & Research July 23, 2010

What Are the Odds You’ll Run Short in Retirement?

According to the 2010 EBRI Retirement Readiness Rating (RRI), more than one-in-four Americans in the lowest income quartile could run out of funds after just ten years. 
Reported by

In addition, EBRI’s RRR, from the nonpartisan Employee Benefit Research Institute (EBRI), finds that after 20 years of retirement, more than half (57%) of that group will run short of funds. 

Things turn out better for those in the highest-income quartile, where only 5% are deemed likely to run short, or the third-income quartile, where only 13% were seen as likely to do so. 

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

An individual or family is considered to “run short of money” if their aggregate resources in retirement are not sufficient to meet aggregate minimum retirement expenditures—defined as a combination of basic expenses from the Bureau of Labor Statistics’ Consumer Expenditure Survey and some health insurance and out‐of‐pocket health-related expenses, plus expenses from nursing home and home health care expenses, at least until the point they are picked up by Medicaid, according to EBRI. 

Prospects of Running Short of Money in Retirement by Income Quartile  

 

 

 10 Years of Retirement 20 Years of Retirement 
Lowest-Income Quartile           

41%

57%

2nd Income Quartile

  23%  

44%

3rd Income Quartile    

13%

29%

Highest-Income Quartile

5%

13%

 

Full details appear in the July EBRI Issue Brief, available at www.ebri.org   

 

 

In Practice July 23, 2010

AARP to Liquidate Mutual Funds

AARP said it will liquidate its lineup of stock and bond funds.

Reported by

The termination of the group’s funds, which have a total of about $160 million in assets, is expected to occur around October 1, said Richard “Mack” Hisey, AARP Funds’ president, in a telephone interview with MarketWatch. “Liquidation was the best option for shareholders,” Hisey said. “There are a number of reasonable alternatives to these funds in the marketplace.”   

MarketWatch reports that Hisey said the funds’ directors had discussed the possibility of another fund family acquiring the assets. Shareholders can find alternatives with help from an AARP Funds financial adviser, or they can receive a check for the proceeds of their account once the funds are shuttered.   

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The funds to be liquidated include: 

  • AARP Aggressive Fund,  
  • AARP Income Fund,  
  • AARP Moderate Fund,  
  • AARP Conservative Fund, and 
  • AARP Money Market Fund. 

Hisey said, “we just didn’t make the impact in the marketplace in terms of size and assets that we had hoped,” according to the news report.

«