While low interest rates may be helping sustain a bull market, they could deplete the assets of Baby Boomers and Gen Xer’s, according to research expected from EBRI. In a simulated model for those with 100% of assets in retirement income and wealth products, continuation of today’s interest rates and low yield (compared with historical rates) could cause 25% of investors to run out of money.
Of course, not everyone has all their money in products affected by interest rates, and the model more seriously affects the wealthiest investors, but the point is well taken. EBRI is also expected to come out with a new “Retirement Readiness Rating” metric that calculates whether an investor is on track for retirement.
With the DOL’s recent announcement that it will require plan sponsors to translate account balances into streams of income on participant statements, more attention is being paid to helping participants plan for the future through better plan design, guidance, advice and education provided by plan sponsors and their advisors.
