Middle-Class More Vulnerable in Retirement than Previously Thought

New Report Demonstrates Need for Guaranteed Retirement Income Sources Such as
Lifetime Annuities

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WASHINGTON, June 10 /PRNewswire-USNewswire/ -- The findings of a new report
released today indicate that the decline in the stock market in the last six
months of 2008 dramatically worsened the retirement outlook for middle-class
Americans. The analysis, conducted by Ernst & Young LLP on behalf of the
retirement coalition Americans for Secure Retirement (ASR), finds that due to
the economic downturn, the retirement assets of recent and near retirees
decreased between 14 and 17 percent in the last six months of 2008. This
decline significantly reduces the likelihood that middle-income retirees will
have enough financial resources to last them through their lifetime.

The study also determined that many Americans will be forced to reduce their
standard of living, some by as much as 51 percent, to avoid outliving their
financial assets and that households with a guaranteed source of retirement
income outside of Social Security, such as a lifetime annuity, showed the
greatest chance of financial success. Conversely, the study found that
households with no guaranteed retirement income outside of Social Security are
most vulnerable to outliving their financial assets.

The new report is an update to Ernst & Young's July 2008 Retirement
Vulnerability Study. The 2008 study found that almost three out of five
middle-class new retirees could expect to outlive their financial assets if
they attempted to maintain their pre-retirement standard of living.

"In only 6 months, the financial downturn has had a significant adverse impact
on the retirement assets of middle-income Americans and on their prospects of
a secure retirement. As was the case in our 2008 study, our update finds that
people with a guaranteed source of income outside of Social Security are much
better positioned than those that are without guaranteed income," said Tom
Neubig of Ernst and Young.

"Now more than ever, it is critical that Americans have guaranteed retirement
income through vehicles like lifetime annuities," said Bill Waldie, Chairman
of ASR. "The traditional retirement system of pensions and Social Security
are increasingly no longer enough for retirees and there is a critical need
for Congress and policy makers to act, to help Americans secure their
retirement future."

Findings of the report include:
-- A recently retired married couple earning $75,000 a year with a
defined
benefit plan has a 57 percent chance that they will have enough
financial resources in retirement. The same couple, without any
guaranteed source of retirement income, is left with only a 6 percent
chance of financial success.

-- A near retiree single female, earning $50,000 a year with a defined
benefit plan, has a 66 percent chance that she will not outlive her
financial resources. The same female, without any guaranteed source of
income in retirement, is left with only an 18 percent chance of
financial success.

Solutions to this retirement challenge are currently being considered in the
Congress. In the House, Representatives Earl Pomeroy (D-ND) and Ginny
Brown-Waite (R-FL) have introduced the Retirement Security Needs Lifetime Pay
Act, H.R. 2748. While in the Senate, Senators Kent Conrad (D-ND) and Pat
Roberts (R-KS) are planning to re-introduce the Retirement Security for Life
Act, a measure that received broad bipartisan support in the 110th Congress.
Both bills would create greater accessibility to non-qualified lifetime
annuities by creating a tax incentive to convert a portion of a person's
savings or assets into a steady "paycheck" for life. The bills would provide a
50 percent tax exclusion on the annual income from a non-qualified annuity,
saving a typical American in the 25 percent tax bracket up to $5,000.

In the updated report, Ernst & Young looked at six of the original 36 typical
middle-income households approaching retirement from the 2008 study, chosen
because they represent retirement vulnerability across all middle-income
households approaching retirement: married couples at or near retirement
making $75,000 in earnings with and without guaranteed retirement income, and
single females making $50,000 in earnings seven years before retirement with
and without guaranteed retirement income.

Americans for Secure Retirement (ASR) is a broad-based coalition of more than
40 organizations who are united in their commitment to ensuring retirement
security for all Americans. Our members share the goal of raising awareness of
the retirement problem and crafting creative solutions to help people save and
prosper in their retired years. Specifically, the coalition advocates for
Congress and policy makers to encourage greater access to retirement security
by passing a tax incentive for lifetime annuities, the only retirement vehicle
that offers a guaranteed stream of income in retirement - a steady paycheck
for life.

To view the original retirement vulnerability study and the recently completed
update, please visit www.paycheckforlife.org. Charts detailing the findings of
the new report follow:

Changes in retirement vulnerability metrics of middle-income households
without defined benefits plans from July 1, 2008 to December 31, 2008

Probability of not
outliving their
financial assets
(success rate

Marital Income Retirement July 1, Jan. 1, Percent
status/gender group age 2008 2009 Change

Married $75,000 Near
retirement 7% 4% -42%

Married $75,000 Recent
retiree 10% 6% -44%

Single female $50,000 Near
retirement 23% 18% -19%

Percent reduction in
pre-retirement
standard of living to
increase success rate
to 95 rate

Marital Income Retirement July 1, Jan. 1, Percent
status/gender group Age 2008 2009 Change

Married $75,000 Near
Retirement -49% -51% 5%

Married $75,000 Recent
Retiree -38% -41% 9%

Single female $50,000 Near
Retirement -38% -41% 6%

Changes in retirement vulnerability metrics of middle-income households
with defined benefit plans from July 1, 2008 to December 31, 2008

Probability of not
outliving their
financial assets
(success rate

Marital Income Retirement July 1, Jan. 1, Percent
status/gender group age 2008 2009 Change

Married $75,000 Near
retirement 43% 31% -26%

Married $75,000 Recent
retiree 69% 57% -18%

Single female $50,000 Near
retirement 73% 66% -10%

Percent reduction in
pre-retirement
standard of living to
increase success rate
to 95 rate

Marital Income Retirement July 1, Jan. 1, Percent
status/gender group age 2008 2009 Change

Married $75,000 Near
retirement -26% -28% 9%

Married $75,000 Recent
retiree -14% -18% 24%

Single female $50,000 Near
retirement -13% -16% 17%

What Congress is Saying about the Updated Ernst & Young Study

"This study offers another stark evaluation of Americans' retirement
readiness. Most middle class Americans have the bulk of their savings in
their IRAs and retirement savings plans, and when faced with the significant
investment losses seen in recent months, many feel that they cannot make their
savings last a lifetime. Annuities enable these workers to maximize the income
from their savings while guaranteeing a monthly retirement paycheck for life.
Congress needs to help Americans not just with building a nest egg but also to
encourage individuals to use insurance tools that supply the much need cash
flow in retirement. Legislation like the Retirement Security Needs Lifetime
Pay Act would help them secure a reliable retirement." - Congressman Earl
Pomeroy (D-ND), Co-Sponsor of H.R. 2748, the Retirement Security Needs
Lifetime Pay Act

"The solutions generated by this study provide a realistic check as well as
hope to the millions of Americans evaluating their retirement. It may make a
great deal of sense for certain retirees to convert a portion of their assets
into a guaranteed source of income. Doing so will let Americans feel more
secure that they will not outlive their finances and be able to live out their
golden years as comfortably as possible." - U.S. Representative Ginny
Brown-Waite (R-FL), Co-Sponsor of H.R. 2748, the Retirement Security Needs
Lifetime Pay Act

"Unfortunately, there continues to be a disconnect, made worse by the downturn
in the economy, between the hopes and realities of a great many Americans
looking to retire in the near future. This report further illustrates the need
for Congress to act, to increase the availability of all retirement options
and help Americans secure the retirement they deserve." - U.S. Senator Kent
Conrad (D-ND), Co-Sponsor of the Retirement Security for Life Act, S. 1010

"We should pass legislation to encourage the purchase of annuities to provide
a guaranteed stream of income for individuals during retirement. This could be
particularly attractive for those that don't have employer-sponsored
retirement plans including the self-employed like farmers and ranchers, and
small businesses. These are hard working Americans who have saved for
retirement on their own and want to ensure that their retirement savings last
through their lifetime." - U.S. Senator Pat Roberts (R-KS), Co-Sponsor of the
Retirement Security for Life Act, S. 1010

SOURCE Americans for Secure Retirement

Elliott Bundy, +1-202-777-3562, ebundy@clsdc.com, or Ana Williams,
+1-202-777-3518, awilliams@clsdc.com, both for Americans for Secure
Retirement