Two long-term factors will help make 2013 a boom year for retirement planners, according to George Castineiras, senior vice president of total retirement solutions at Prudential.
First, nearly $18.5 trillion in retirement assets is set to go into play over the next two decades, which means a lot of “money in motion,” he says. In addition, Castineiras was encouraged by the fact that 79 million baby boomers are set to crest the 65 mark for the next 16 years at a rate of nearly 10,000 per day, according to the Pew Research Center.
“From my perspective the retirement outlook is very, very positive,” he says. “And that’s not just in 2013; that’s well beyond that.”
Retirement planning will be especially important because many households remain unprepared, according to Castineiras. Because of a savings rate as low as 3.3% and longer lifespans, some 50% of households are at risk for not being able to maintain their lifestyle in retirement, he says.
Adding to a need for additional planning, defined benefit plans are on their way out. According to Castineiras, only 16% of U.S. employers still offer a defined benefit plan.
Further, new engagement methods for these plans will become important, with auto-enrollment and other features are taking on an even greater role going forward, he says. “The Pension Protection Act initiated [the rise in automatic features] and provided a safe harbor for plan sponsors: auto-enrollment, auto-escalation, auto-investment strategy, auto-income” he says. “People can’t run out of money.”
Mason Braswell is associate editor of On Wall Street, a SourceMedia publication.
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