Products November 16, 2006

State Street Unveils Two ETFs

State Street Global Advisors (SSgA), on Tuesday announced that it had launched two international exchange-traded funds (ETFs) on the American Stock Exchange.
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The ETFs include two Japan-focused funds based upon indices created by the Russell Investment Group and Nomura Securities Co., Ltd. The ETFs include:

  • streetTRACKS Russell/Nomura Prime JAPAN ETF, which focuses on the broad Japanese stock market and measures the performance ofJapan‘s 1,000 largest stocks. The index offers investors one of the most comprehensive benchmarks available for the Japanese market, SSgA claimed.
  • streetTRACKS Russell/Nomura Small Cap Japan ETF, which tracks the smallest 15% of companies in the Japanese stock market.

“These new ETFs add to our collection of international funds and enable investors to better access the Japanese market, a global economic powerhouse second in size only to theUSmarket,” said James Ross, senior managing director of State Street Global Advisors.

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State Street has approximately $110 billion in ETF assets under management. More information is at www.ssga.com.

Data & Research November 16, 2006

Study: Average Worker needs to Save $11K+ More Annually for Retirement

The average employee needs to contribute an additional $11,400 to their retirement savings – or 21.2% of pay - annually to get back on track to having a big enough nest egg for them to live on in retirement, according to the latest data from a continuing retirement savings study.
Reported by

The Aon Consulting/Georgia State University Retirement Income Replacement Ratio Study, which has examined the amount workers will need to generate to continue living their chosen lifestyle, said those earning $60,000 a year need to replace 75% of their last year’s earnings.

Of the 140,000 employees in the 2006 study, 58% are on track to a financially secure, according to the report. The 58% on-track figure reflects both those who are contributing to their employers’ plans and those who are not contributing. Looking at just participants, the on-track percentage shoots up to 72%.

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According to the study’s latest data, the participant age groups and the amount they need to add to their annual savings (in dollar and percentage terms) to get back on track to having a large enough retirement savings include:

  • Under 25 years old – $950, 3.3%
  • 25-34 – $1,500, 3.5%
  • 35-44 – $4,350, 7.7%
  • 45-54 – $9,250, 14.7%
  • 55-64 – $33,700, 53.8%

The additional 21% of pay needed to be saved annually for the average employee means that a worker earning $35,000 would have to save an additional $7,350.

Researchers also contended that the data supports the age-old retirement savings adage about the importance of starting early. Some 92% of participants in the 25 to 34 age group are on track with an average deferral rate of 5.8% while only 58% of the 45 to 54 age group, who are deferring an average of 7.7%, are on track.

Researchers tracked 16,000 participants between 2004 and 2006 and found the following:

  • the number projected to be on track decreased 1.6%
  • employees’ average deferral rate (includes those not saving) increased from 5.04% to 5.27%
  • employees’ average account balance increased 22.4%
  • average account balance as a percentage of average annual compensation increased from 70.2% to 81.7%

Researchers used data developed by tracking participants in plans served by Aon’s personalized employee benefit unit, Benefacts.

The report is here

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