When should I retire? Should I work after I retire? How will I generate a retirement paycheck? Where will I live? How will I spend my leisure time? How will I continue to provide for dependents? How do I protect my assets and transfer wealth?
These are but a few of the critical lifestyle questions and financial considerations that baby boomers grapple with as retirement looms closer. They are the foundation of The Fourth Pillar: Retirement Choices white paper released today by Prudential Financial (NYSE:PRU).
Focusing on specific, actionable steps individuals can take to plan a secure retirement, The Fourth Pillar highlights the interactivity between the financial and lifestyle choices that baby boomers face during the critical years before retirement.
Introduced in 2006 as a framework to discuss how Americans will prepare for and live in retirement, Prudential's "Four Pillars of U.S. Retirement" concept has its origins in the traditional "three-legged stool" of retirement security: Social Security, employment-based plans and personal savings. Prudential adds a fourth pillar to the model - retirement choices - which are the lifestyle and financial options that have taken on greater significance as the nature of retirement in America has changed.
"The confluence of demographic, economic and social trends - including longer lifespans and the decline of traditional pensions - is putting considerable pressure on the first three Pillars and increased responsibility on individuals' shoulders," said John Strangfeld, vice chairman, Prudential Financial.
"Understanding the financial and lifestyle choices that can and do influence retirement security is an imperative to planning; these Fourth Pillar decisions are integrally connected to individuals' well-being in retirement."
Striking a balance between financial resources and lifestyle goals is often challenging. The Fourth Pillar highlights a number of key decision points to consider as part of that balancing act, including:
Lifestyle Choices:
- When to start retirement
- Whether and how to work in retirement
- Where to live
- How to provide care for dependents
- How to spend leisure time
Financial Choices:
- How to approach retirement income planning
- When to begin drawing Social Security
- How to convert assets into a stream of retirement income
- How to minimize taxes on retirement income
- How to protect assets and transfer wealth
Dallas Salisbury, president and CEO of the Employee Benefit Research Institute and American Savings Education Council, and Abigail Trafford, author of My Time, Making the Most of the Bonus Decades After Fifty, who each contributed to the paper, underscore the importance of The Fourth Pillar for Americans approaching retirement.
According to Salisbury, The Fourth Pillar is an important document to help dispel the myths that have long surrounded work and retirement in our society. "Myths are destructive because they cause us to save less, think we can afford to retire when we actually can't, fail to save for retiree health expenses, and think we do not need to plan for long-term care with savings or insurance. "¦ This paper tells hard truths "¦ Since World War II, at least 75 percent of the population would have been better off if they had read this paper."
Trafford adds that the demographic wave sweeping the social landscape is causing Americans to not only live longer, but to live healthier longer. "The old rules of retirement have been taken over by the new realities of longevity. Yet, for most men and women, this new phase (of life) heralds unprecedented possibility."
Near-retirees are finding that the answers to the critical considerations explored in The Fourth Pillar are defining the new realities of retirement. They are learning that how they address these issues will greatly influence how they live in retirements that can last 20 - 30 years, or more. "While these retirement choices are not new, they take on heightened significance in the face of current market trends," Strangfeld continued. "Consumers can easily be overwhelmed by the many facets of retirement planning. The Fourth Pillar provides a blueprint to help individuals create a path to managing and securing their retirement."
A complete copy of The Fourth Pillar: Retirement Choices brochure is available on Prudential's website, www.prudential.com.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $648 billion of assets under management as of June 30, 2007, has operations in the United States, Asia, Europe, and Latin America. Leveraging its heritage of life insurance and asset management expertise, Prudential is focused on helping individual and institutional customers grow and protect their wealth. The company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. Prudential's businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. For more information, please visit www.prudential.com
Insurance products issued by The Prudential Insurance Company of America, Newark, NJ and its affiliates. Securities products distributed by Prudential Investment Management Services LLC, member SIPC. All are Prudential Financial companies.
