Demographic Time Bomb Is Ticking

August 2004
Journal of Financial Planning;Aug2004, Vol. 17 Issue 8, p18
Academic Journal
According to an analysis released by Employee Benefits Research Institute (EBRI) in August 2004, younger workers are facing the loss of retirement income due to the continuing decline of private-sector defined-benefit pension plans. In its report, ERISA at 30: The Decline of Private-Sector Defined Benefit Promises and Annuity Payments? What Will It Mean?, EBRI also examines the impact of the increasing pattern of employees forgoing plan annuitization in favor of lump-sum distributions. To maintain a 75 percent change of covering expenses in retirement, EBRI concluded that: if all defined-benefit participants took a lump-sum distribution, they would need to increase their annual personal savings an average of 14.9 percent; and if all defined-benefit participants annuitized their accounts, they would need 30 percent less in annual savings.


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