Study Projects Financial Crisis for Many W.Va. Retirees
Posted on: Wednesday, 23 July 2008, 00:00 CDT
By The Associated Press
West Virginians may have a hard time making ends meet in retirement, according a study on pension assets.
The study, conducted for the group Americans for Secure Retirement, indicates that 67 percent of West Virginians entering retirement now are at risk of outliving their retirement savings. To avoid this, the study says the average West Virginia middle-class household would have to reduce its standard of living by 30 percent.
The study was performed by Ernst & Young and looked at retirement vulnerability seven years before retirement and at retirement. It looked at 36 different types of middle-class households, which were defined as those with pre-retirement incomes of $50,000, $75,000 and $100,000.
"Many Americans envision a leisurely retirement where their lifestyle continues much as before," Tom Neubig of Ernst & Young said in a news release. "Our work shows that this is not a realistic expectation and that with the current state of savings, retirees will have to cut back far more on expenditures than they had ever expected."
For West Virginia, the report noted that state residents earning $75,000 had the greatest chance of outliving their financial assets. Married couples, because of their longer joint life spans, are more likely to exhaust their retirement savings before single households.
Single women are more likely than single men to run through their savings because of life expectancy. In West Virginia, the average life span for a woman is 75.8 compared to 68.4 for men, according to the state Division of Health and Human Resources.
Americans for Secure Retirement Chairman Joe Reali said the pension problem stems from two reasons: only 21 percent of Americans are covered by retirement plans that provide benefits for life, down from 40 percent 30 years ago, and Americans are not good savers.
"We did a study, and 43 percent of people thought that if they took 10 percent of their income out of their pay, it would keep them through retirement," Reali said.
In fact, such a plan would last only about 13 years on average, while people are likely to live 25 years after retirement, he said.
The coalition is pushing for legislative reforms to ensure living standards are not reduced because of inadequate pension and retirement funding.
Legislation before Congress would encourage Americans to have a steady source of guaranteed income in retirement by providing a tax incentive for lifetime annuities.
(c) 2008 Charleston Gazette, The. Provided by ProQuest Information and Learning. All rights Reserved.
Source: Charleston Gazette, The
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