Individual Plans

The Retirement Income Challenge

In the 1980s, as employers replaced pension plans with 401k and similar self-directed retirement plans, 42 million American workers became responsible for their own paycheck replacement without adequate education or a reliable source of advice.

This happened in the midst of a once-in-a-lifetime bull market that encouraged investors to think they could get rich quick in stocks. Reality set in with the advent of the 2000-2002 bear market during which many high-flying stocks and stock funds lost 50% to 70% of their value.

The Switch to Self-Directed
Isn't Going Well

Recent studies conclude that the transition to self-directing a portfolio for retirement isn't going well:

• Not Saving Enough. The 2007 Fidelity Research Institute Retirement Index reports that, overall, from all sources, Americans are on track to replace 58 percent of pre-retirement income-a 42% haircut in income on retirement day.
• Not Investing Smart. And things aren't going well with the funds being saved. In a recent study, The Center for Retirement Research at Boston College reports that for the period 1998-2003 the average returns for 401k accounts and IRAs were 1% and 2.8%, respectively, less than institutional portfolios (such as pension funds).