Data & Research March 8, 2019

Retirement Savings Shortfall Ticks Downward

Just over four in 10 U.S. households are projected to run short of money in retirement, according to an updated analysis from EBRI.

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The EBRI Retirement Security Projection Model (RSPM) found that for 2019, 40.6% of all U.S. households where the head of the household is between 35 and 54 are projected to run short of money in retirement, down slightly from 42.3% in 2014.

In line with this, the aggregate retirement deficit of American households in this age cohort, including Social Security benefits, is estimated to be $3.83 trillion, down 15.9% from $4.44 trillion in 2014. However, when pro rata reductions in Social Security retirement benefits are assumed to begin in 2034, the aggregate retirement deficit increases by 6% to $4.06 trillion.

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On an individual basis, the average retirement savings shortfall for those between the ages of 60 and 64 ranges from $12,640 per individual for widowers and $15,782 for widows. For single males, it is $24,905 and for single females, $62,127.

Defined contribution (DC) plan eligibility has a significant impact. Individuals between the ages of 35 and 39 who have no future years of eligibility in a DC plan have an average retirement deficit of $78,046 per individual. This is more than five-times the $14,638 individual retirement deficit of those who have at least 20 years of future eligibility in a DC plan.

A 23% pro rata reduction in Social Security benefits beginning in 2034 would increase average retirement deficits by 17% for those currently between the ages of 35 and 39.

The results also find longevity risk can play a significant role in increasing retirement savings shortfalls. Those in the longest relative longevity quartile have a retirement deficit that is 10.2-times that for those in the shortest relative longevity quartile.

EBRI’s Retirement Readiness Rating (RRR), on the other hand, measures the percentage of households projected to not run out of money in retirement. In 2019, this rose to 59.4%, up 1.7 percentage points from 57.7% in 2014.

Products March 7, 2019

Colonial Life and FutureFuel Create Student Loan Repayment Solution

The firms say strong demand among employers and employees for student loan repayment support solutions made their new partnership “an easy decision.”

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Colonial Life has partnered with FutureFuel.io to offer a program designed to reduce the life of employees’ student loan debt through education, refinancing options and making it easier for employees and their employers to contribute towards the debt.

FutureFuel.io has different options that a client can select for what best fits its employees and the company. Each option consists of the following features: Employees have the ability to manage all of their student debt in one location through a “roll up” feature, educational content is provided to keep employees informed about managing their debt, and there is a refinancing tool for employees who are looking to combine multiple payments or potentially reduce the interest rates on their student loans.

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FutureFuel.io’s Round Up + Refinance option uses “rounding up” technology to automate spare change to make payments on student loan debt. The Repayment + Refinance option allows employers to make monthly contributions toward their employees’ student loan debt.

“We know that student loan debt can be a major cause of stress for millions of America’s workers, so offering our customers a chance to relieve some of that burden is an easy decision for us,” says Tim Arnold, president and CEO of Colonial Life. “Working with a strong partner like FutureFuel.io allows us to engage employees and their employers in a new and exciting way that helps take control of student debt.”

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