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60% of RIO participants are not prepared for retirement: Cerulli

Cerulli's recent survey of 401(k) participants found that 37% of participants age 55 and older said they were not adequately prepared if they were forced into retirement

December 12, 2013 11:39 IST | India Infoline News Service
According to new research from global analytics firm Cerulli Associates, more than 60% of retirement income opportunity (RIO) participants are not confident they are prepared for retirement. Cerulli defines RIO participants as active 401(k) participants age 55 and older.

"Unfortunately many individuals are forced into retirement due to job loss or health concerns for themselves or a family member," states Kevin Chisholm, associate director at Cerulli. "This means that an individual needs to be prepared for retirement before the age they expect to retire."

The fourth quarter 2013 issue of the The Cerulli Edge-Retirement Edition analyzes the regulatory changes within defined contribution (DC) plans over the past decade, how legal action is presenting a challenge for 401(k) plan sponsors, and fiduciary pressures faced by 403(b) plans.

"It is essential that DC plans continue to evolve to ensure retirement readiness for a majority of participants," Chisholm explains.

Cerulli's recent survey of 401(k) participants found that 37% of participants age 55 and older said they were not adequately prepared if they were forced into retirement. This includes 53% of the participants in the 55-59 age bracket, which the industry classifies as pre-retirees.

"The number of pre-retirees that are unprepared for retirement is staggering," continues Chisholm. "More than 75% of participants between the age of 55 and 59 indicated they are either not prepared for retirement, or they are unsure if they are prepared."

The stakes are high for the DC industry as policy makers and industry observers debate the effectiveness of these plans as a primary retirement program. 

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