Data & Research January 21, 2011

Economic Downturn Derailed at least 4% of Retirement Savers

An Employee Benefit Research Institute (EBRI) study finds some Americans who were on track for a comfortable retirement are now at risk of running short because of the economic downturn.
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The findings show 3.8% to 14% of Americans who were on track are now at risk of running short because of the economic downturn.  EBRI says Early Boomer households would generally need to save between 1% and 4% of compensation more each year until they reach retirement. The variation depends on factors such as account balance, exposure to the equity market and how close the person is to retirement, EBRI said.

The study also finds that additional savings depends on how much of a chance of success a saver desires. For instance:

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  • The median percentage of additional compensation for Early Boomers wanting a 50% probability of retirement income adequacy are 3% of compensation each year until retirement age, to account for the financial and housing market crisis in 2008–2009. Similar values are 0.9% for Late Boomers and 0.3% for Gen Xers.
  • For a 70% probability of adequacy, these numbers increase correspondingly, with the largest impact on those closest to retirement age. The median percentage of additional compensation for Early Boomers wanting a 70% probability of adequacy is 3.8%, in order to account for the financial and housing market crisis.
  • The median percentage of additional compensation for Early Boomers wanting a 90% probability of adequacy is 4.3% to account for the financial and housing market crisis

The analysis is based on data from EBRI’s 2010 Retirement Security Projection Model (RSPM) and EBRI’s 2010 Retirement Readiness Rating (RRR), which provide a benchmark for Americans’ prospects of having sufficient resources to cover basic expenses and uninsured health expenses in retirement.

More about the study is here.

Deals & People January 21, 2011

BofA Merrill Lynch Restructures Personal Retirement Team

Personal Retirement Solutions (PRS) at Bank of America Merrill Lynch has a newly named leadership team, including a new hire.
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In an internal memo, David Tyrie, head of PRS, announced that the unit has been reorganized into five areas of focus to be led by members of the newly named PRS leadership team, “as part of our ongoing efforts to organize our business and capabilities around client needs and better align with our 2011 strategic growth plans” (see “BofA Merrill Lynch Hires Head of Personal Retirement Services“).

Surya Kolluri will lead Retirement Channel Management. That team will “ensure our products are effectively marketed and delivered to clients through key partners across GWIM and the broader enterprise,” according to Tyrie.

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Kolluri will also lead the Workplace Wealth team, responsible for the development and execution of initiatives and strategies designed to deliver products and services to employees at every level of an organization that does business with BofA Merrill Lynch.

The Retirement Product Management team will be lead by Chuck Toth. This group is responsible for leading the development and ongoing management of retirement planning and college savings products and capabilities, including IRAs, rollovers, wealth transfer, 529 plans, and retirement income solutions.

Doug Comer will head Participant Education and Communication, which is responsible for all facets of participant communication including campaigns, platform analytics, educational programs and collateral and also works to connecting plan participants with financial solutions available in other parts of the organization.

Later in January, Evelyn Varner will be joining BofA Merrill Lynch to lead a new Personal Retirement Solutions function called Interactive Platform Management, leading the company’s online client experience, working closely with our Institutional Retirement Business on both plan participant and plan sponsor websites and tools, including the management of and content development for the Benefits Online platform for 401(k) plans.   Varner’s group will also serve as the research and development arm of PRS, developing business cases for new products and enhancements.

Varner joins the company from Monster Worldwide where she was responsible for marketing strategy and programs, as well as developing the company’s global marketing roadmap. Previously, she was vice president of marketing strategy and innovation at Fidelity Investments.

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