Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Retirees face ‘guaranteed income gap,’ Fidelity warns
Old 08-30-2007, 05:41 PM   #1
Recycles dryer sheets
 
Join Date: Jul 2005
Posts: 423
Retirees face ‘guaranteed income gap,’ Fidelity warns

Quote:
U.S. workers are living longer, and those extra years are running up against declines in the types of retirement income guaranteed to last as long, like Social Security and defined-benefit pension plans, according to a report issued today by the Fidelity Research Institute.

Fidelity estimated the “guaranteed income gap” could total billions of dollars a year and said the problem is compounded by the fact that workers underestimate how long they’re likely to live.

Fidelity’s research shows that on average, retirees estimate that their savings need to last until age 85, while pre-retirees think their savings need to last until age 83. In fact, a healthy 65-year-old man has a 24% chance of living to 90 and a healthy 65-year-old woman has a 35% chance of reaching 90.

In order for retirees to have enough money to last their lifetimes, when they’re deciding how to invest their savings, they should consider “lifetime income products,” like annuities, in addition to stocks and bonds, Fidelity argued.

It includes in that category not only income annuities and variable annuities, but also systematic withdrawal plans, in which retirees draw down a fixed percentage of their savings each year.

Fidelity noted that the amount a retiree has saved will have a bearing on which option is best. Retirees who have to withdraw only a small portion of their savings each year to pay the bills may not need to incur the additional costs of buying some type of annuity, the report says, but those who will need to withdraw a moderate or large portion of their savings each year can probably benefit by buying some type of annuity.
Retirees face ‘guaranteed income gap,’ Fidelity warns - Financial Week
__________________

__________________
Olav23 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-30-2007, 06:03 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
My heartburn with that is this: The Norwegian widow knew what to do in 1948 and still does.

What part of stupid don't these people get?

heh heh heh - perhaps a mini rant - Psssst! Wellesley and let it go at that. Take current yield and then figure out how to live forever!
__________________

__________________
unclemick is offline   Reply With Quote
Old 08-30-2007, 06:44 PM   #3
Thinks s/he gets paid by the post
maddythebeagle's Avatar
 
Join Date: Jun 2005
Posts: 2,450
Oh, boy another thread on annuities
__________________
- Hurry! to the cliffs of insanity!
maddythebeagle is offline   Reply With Quote
Old 08-30-2007, 08:21 PM   #4
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
Quote:
Originally Posted by maddythebeagle View Post
Oh, boy another thread on annuities
Maybe someone will learn how stupid they are.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 08-30-2007, 08:29 PM   #5
Thinks s/he gets paid by the post
packrat44's Avatar
 
Join Date: Jun 2007
Location: near Canadian border and near Mexican border
Posts: 1,142
Quote:

Fidelity noted that the amount a retiree has saved will have a bearing on which option is best. Retirees who have to withdraw only a small portion of their savings each year to pay the bills may not need to incur the additional costs of buying some type of annuity, the report says, but those who will need to withdraw a moderate or large portion of their savings each year can probably benefit by buying some type of annuity.



At least Fido acknowledged the higher cost of annuities.
__________________
Pigs get fat, hogs get slaughtered. That's my story and I am sticking to it.
packrat44 is offline   Reply With Quote
Old 08-30-2007, 09:20 PM   #6
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
Quote:
Originally Posted by packrat44 View Post
At least Fido acknowledged the higher cost of annuities.
As the nation's largest servicer of 401(k) plans, it sounds like Fidelity is making sure that its litigious assets are covered...
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 08-31-2007, 10:46 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Ah yes - slice and dice and some annuities - the combo's are endless.

The financial types will never run out of work.

Hope springs eternal. And don't forget - you can always count on those hormones!

heh heh heh heh heh heh heh heh heh
__________________
unclemick is offline   Reply With Quote
Old 09-01-2007, 01:34 PM   #8
Full time employment: Posting here.
 
Join Date: Sep 2006
Posts: 608
Quote:
Originally Posted by unclemick View Post
heh heh heh - perhaps a mini rant - Psssst! Wellesley and let it go at that. Take current yield and then figure out how to live forever!
The yield of Wellesley is nice. But it doesn't really look to me
like the share price is historically keeping pace with inflation.
__________________

__________________
JohnEyles is offline   Reply With Quote
Reply

Tags
fidelity


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Fidelity High Income Fund - Should I fear? Budman FIRE and Money 24 02-25-2007 08:53 PM
Fidelity recommendation johnbb FIRE and Money 26 10-22-2006 03:26 AM
At what age will you take Social Security? retire@40 FIRE and Money 39 10-05-2006 01:58 PM
Fidelity Stategic Income (FSICX) kenepp1 FIRE and Money 6 06-14-2005 06:52 PM
What is taxable income? mickeyd Other topics 21 01-29-2005 04:02 PM

 

 
All times are GMT -6. The time now is 05:23 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.