The State of Retirement Planning
People who live in U.S. News's hometown of Washington have the best shot at retirement security, according to a new study. Yes, the cost of living is among the highest in the country. But workers in the District of Columbia are much more likely to have federal government pension plans and retiree health insurance that make retirement planning much easier.
The study by Ernst & Young and Americans for Secure Retirement is the latest in a series of studies predicting that Americans will be woefully unprepared for retirement. While almost 60 percent of new middle-class retirees can expect to outlive their financial assets if they attempt to maintain their preretirement standard of living, Ernst & Young calculated, the probability of outliving one's assets ranges from 39 percent in the District of Columbia to 72 percent in Montana.
Other places where retirees are relatively unlikely to outlive their assets are Rhode Island, Utah, and New York. Wyoming and South Dakota are among the locales where more citizens are likely to run out of money. Ernst & Young attributes the geographic differences to variation in employer pension plan coverage, income distribution, and demographics.
Of course, you can always reduce your retirement consumption in fairly pain-free ways by downsizing your house or car, moving to an area with a lower cost of living, and curbing nonessential expenses. Ernst and Young calculated that the standard of living reduction necessary for new retirees to slim the likelihood of outliving their financial assets ranges from 7 percent in the District of Columbia to 35 percent in Montana (when calculated with a 5 percent failure rate).
The take-home message from Tom Neubig, Ernst & Young's national director of quantitative economics and statistics: "Having a guaranteed source of income other than Social Security does make retirees better prepared for retirement." That advice holds even if you spend larger amounts during your working years on housing and transportation in an expensive state.
You can check out Ernst & Young's dire retirement preparedness statistics about your state here.
Tags: retirement | Washington, DC
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Reader Comments
Government guys are doing fine
Nothing against public-sector workers now, but citizens who elected governments complicit in the shift (for private-sector) workers) from real pensions to 401(k)----while those politicians retained THEIR real pensions----were dumb-cluck citizens. The folks in Montana and elsewhere may eventually wake up from their gun worship and be "bitter" about that, just as Obama accidentally predicted.
Civil Servant Benefits
Private companies have LONG KNOWN that free or heavily subsidized retiree health coverage is unaffordable and would bankrupt them ....... thats WHY its all but GONE from the private sector.
The COST of these benefits is no less bankrupting in the public sector. But due to strong labor unions and inept/corrupt politicians little reductions in benefits have occurred in the PUBLIC SECTOR. Amazing how UNFAIR it is that TAXPAYERS (on;ly 10-15% of whom are civil servants) pay for all civil servants' retiree health benefits while not having the money to pay for their own.
Civil Servants are the energizer bunny's of greed and the self-serving, vote-selling, contribution-soliciting, politicians are their enablers.
To the person above
Unfortunately you are correct: the cost of the benefits IS much too high and is part of the reason our government is bankrupt. Its not the fault of the civil servants though, it is more the fault of unions/politicians.
While I wish we could give huge pensions for the rest of people's lives it simply isnt feasible. The system worked when people worked until they died, this simply isn't (and shouldnt be) the case any more.
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