forecast report slides

Forecast 2010:

Navigating retirement

unknowns

And charting a course anyway

a retirement Security Institute report

february 2010

www.retirementsecurityinstitute.com

Tuesday, February 23, 2010

http://www.retirementsecurityinstitute.com


prelude to

retirement forecastwww.retirementsecurityinstitute.com




prelude

• China, one of our largest foreign creditors,

expressed public chagrin at the U.S.’s fiscal

mess for the first time.

• Returns on retirement portfolios were rising

on the back of easy credit, thus leading to

more debt.

• The clean up continues, and will for many

years, especially for those losing livelihoods or

irreplaceable investments.





Economic Climate

• The federal debt ratio to GDP is around

84%, up from 41% in 2008.

• Experts say a tipping point is at the 90%

mark, where debt servicing chips away

at growth.





Economic

Climate

With a population aging

more rapidly than the

U.S.’s, Japan saw savings

rates decline from 10%

in the 1990s to 2.2% in

2007. U.S. rates were

nearly zero in 2007. In

2009, after the largest

financial crisis since

the depression,

Americans began saving

more seriously, to a high

of 6.0% in 2009.





demographics

• Because of longevity prospects, Social

Security benefits will be delayed to age

67 for those born in 1960.

• Late-period Boomers, Gens X and Y will

receive lower replacement incomes than

current retirees and older Boomers set

to retire.





Parsing the Crisis

New Evidence from research

• There was a flight to quality

effect where large cap stocks

served the role of an

insurance policy.

• Owning an asset that is more

liquid like a large cap stock

such as GE acts as a liquidity

hedge during a downturn.

• Small cap stocks proved less

liquid, and their activity

dropped 40% during the

height of the crisis.





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