You don’t even have to be part of the retirement plan industry to know that Americans are woefully unprepared for retirement. You and I happen to see it in every single client situation.

That’s why many of my weekly columns have the theme of assisting employees with “retirement readiness.”

That’s the industry term, or course. But what exactly is retirement readiness? The standard definition is the amount of income needed at retirement as measured by the Replacement Rate, a seemingly simple percentage determined as follows:

Some measure of retirement income
Some measure of pre-retirement income

Lot of help, eh? But the key findings in a recent study by the Society of Actuaries can give us much needed context when we talk about retirement readiness with our clients. Some of those key findings include:

  • Many members of the next generation of retirees are facing a big drop in their standard of living when they retire.
  • The most appropriate measure of retirement benefit adequacy depends on the stakeholder: plan sponsor/employer; financial planner/individual; public policymaker; or financial institution.
  • There is no "one-size-fits-all" measure of benefit adequacy and there are many "moving parts" depending on the purpose and the stakeholder using it. Individuals need to be aware that attempts to over-simplify the retirement planning process can be very dangerous if used for personal decision making.
  • Retirement planning needs to continue after retirement as situations change. Individuals should also take a "holistic" approach that incorporates the interactions between various decisions and events.
  • It is important to keep Social Security financially strong since it is a critical component of income for many retirees, especially those who are most at risk.

Here is a link to the study, Measures of Retirement Benefit Adequacy: Which, Why, For Whom, and How Much?  Worth reading in its entirety.

Jerry Kalish is President of National Benefit Services, Inc., a Chicago-based retirement consulting, actuarial, and administrative firm. He has been publishing The Retirement Plan Blog since 2006. He can be reached via email at


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