New Findings Reveal Disconnect Between the Perception and Reality of Achieving Financial Retirement Security

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Reston, VA, [June 27, 2006] — While retirement planning has always been a challenge, Americans today face a series of new dilemmas. For many, the most challenging aspect of retirement planning is the fact that the burden of funding retirement is increasingly becoming an individual responsibility.
According to data released today by the National Association for Variable Annuities (NAVA), 81 percent of Americans believe that, aside from Social Security payments, they are almost entirely responsible for ensuring their financial well-being in retirement. This number is up sharply from the results of a study conducted in January 2006, which found that only about 65 percent of working Americans felt this way[1], indicating a growing national belief that individuals must take personal responsibility for their financial futures.
Gone are the days when employers reward long-term company loyalty with guaranteed financial retirement support. Today, even large profitable corporations are increasingly eliminating employee defined benefit plans or limiting employee eligibility, shifting most of the burden of funding retirement to the individual.
Yet surprisingly, when asked if they believe that their current or future employer would offer a guaranteed pension plan, 49 percent of all respondents who have not yet retired answered yes.

According to Mark Mackey, president and CEO of NAVA, this discrepancy in Americans’ understanding of today’s new retirement realities is an issue that must be addressed. “We live in a climate where a number of highly visible, blue-chip companies are no longer offering pensions to new employees, and one would expect other companies to follow suit. While it’s encouraging to see that most Americans understand that they must take greater personal responsibility for their financial futures, they must also come to terms with the fact that fewer and fewer companies are offering pension plans.”
Additional data released by NAVA sheds more light on Americans’ feelings about this issue:
· More income, more confidence — Fifty-two percent of Americans with household incomes of $25,000 or more are expecting their employer to provide a pension plan; only 40 percent of those making less than $25,000 hold the same belief.
· More education is needed — Younger Americans are misguided in their expectations for pension plans, despite growing up in an era in which employer pension plans are the exception, rather than the rule. Fifty percent of respondents aged 18 to 34 believe their employer will offer a pension plan.
· More women are expecting pensions — More women than men (51 percent vs. 47 percent) said they are counting on company pension plans to provide retirement income.
Regardless of where Americans stand on this issue, individuals can live a financially comfortable lifestyle in retirement with proper planning, according to John Huggard, faculty member at North Carolina State University. “The smartest way to fill the gap left by traditional pension plans is to use existing financial vehicles to generate income in retirement,” said Huggard. “With 401(k) plans and IRAs, as well as annuities, you are able to accumulate assets tax-deferred. In addition, annuities can be a great way to protect your retirement assets from market downturns.”
An annuity is a financial retirement vehicle offering a combination of insurance benefits, tax-deferred savings and guaranteed lifetime income payments. Variable annuities allow individuals to invest in a variety of underlying fixed and equity funds, and provide returns

based on the performance of these funds. Valuable insurance features include beneficiary protection in the form of the guaranteed minimum death benefit, and living benefits which protect against downside market risk. These benefits provide consumers with the confidence to stay invested in the market where the highest returns have traditionally been. A variable annuity also offers the ability to convert retirement savings into a steady “paycheck” for life, similar to pension plan payments.

According to NAVA, the best thing Americans can do to be prepared is to begin taking the steps necessary to create a retirement plan, with the help of a professional financial consultant, to ensure that they will have sufficient income to cover retirement expenses. (See “Retirement Income Rules of Thumb” sidebar for more information.)
The retirement data was generated by Kelton Research in April 2006 for NAVA. A broad national cross-section of 1,000 respondents was polled via telephone between April 24 and April 27. The survey has an error rate of +/- 3.1 percent.

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