Middle-class retirees and those nearing retirement are even worse off now than they were six months ago, says a new study by Ernst & Young, completed for Americans for Secure Retirement, an advocacy group based in Washington, D.C.
Some will be forced to reduce their standard of living by as much as 51% to avoid outliving their financial assets. Those with no guaranteed retirement income outside of Social Security are the most vulnerable, the study says.
For instance, the study says, a recently retired married couple who earned $75,000 a year and with a defined benefit retirement plan has a 57% chance of having enough financial resources for retirement. But the same couple without any guaranteed source of income other than Social Security is left with a 6% chance of having enough funds.
Likewise, a single female nearing retirement making $50,000 a year and with a defined benefit plan has a 66% chance of having enough money, but her chance of success drops to 18% without a guaranteed source of retirement income.
All of the chances for a successful retirement are down 3 percentage points to 12 percentage points from six months ago.
Two bills that would help retirees are pending in Congress, the organization says. The Retirement Security Needs Lifetime Pay Act and the Retirement Security for Life Act would provide a 50% tax exclusion on the annual income from a nonqualified annuity, which would encourage people to convert some of their savings or assets to annuities for a lifetime pay check.