I greatly appreciate the opportunity to discuss this important topic with 1. when monthly •Include What working, more payment. Lifestyle money unless And, Do for following You health clearly, Want? expenses a alldetailed the monthly than andyou careful and were yearly budget spending expenses and while futures), grow your expense budget through your years of expected retirement. Can you Today I have been asked to focus my comments on what information individuals Chairman McMahon and members of the workgroup: you today. Most retirees continue to have Social Security as their primary source create an absolute requirement for current income. Most retirees spending working. plan. Most retirees will not have employer-facilitated health grow shouldyour possess income •prior Charting expectations to making Your the asFinancial well? decision What Future to retire. are your I will expected seek toincome do that sources? by providing For I am Dallas Salisbury, President and CEO of the Employee Benefit Research of income. For a large percentage of retirees it is their only source of income. It 5. Adjust responding insurance. your Purchase to spending our annual on budget the Retirement open down market toConfidence match is expensive. your Survey income, Medicare say beginning they only do not with pays some example, "'steps", a Federal leaving employee time forhired discussion. in 1980Iwho have is placed part of these the "old" steps C inSRS a different pensionorder Institute. EBRI• hasLegal worked Preparations with the Department of Labor and the ERISA Advisory was not designed to provide an adequate income, and it does not. Yet, for a your plan first to sell year their of primary retirement. pre-retirement Need to move residence to a smaller duringhome? retirement. Need to system can expect an average an annuity of 54 forpercent life that ofisretiree indexed medical for inflation. expenses Itand, will contrary grow. Should to than many others would based upon our research and what it suggests individuals most Council since its • founding Understanding in 1978, Risks and I had the honor of serving as a member of the majority of today's workers it will play the same dominant role unless they take sell Therefore, a second most home? should Need not to count remain it asinan the asset work as force they consider longer intheir order to readily that worker knowhave and public a don't spouse opinion, know. working does For example, in not the pay private for most long-term sector peoplewho have care. will a So poor have even idea a Social for ofthe how Security minority long Council in the 1980's. Related directly to this work group, EBRI began working with • Design a Strategy T - 130 action and change their behavior. Your work can only help. ability to retire. They should count all the expenses of staying in that build that think savings theyto will a point have that enough they income will match for retirement, with the spending they should budget? re- annuity, they can also expect indexed to live,each so Iyear always for start inflation, with that they question. will have Without two income an individualized sources that PWBA in 1994 on issues related to savings and retirement planning education. That • Protecting What You Have home. Whatever it takes, don't sign retirement papers until you have a financial check their health spending figures. The internet has good information on target grow. for They lifemight expectancy purchase it isan difficult inflation-indexed to figure out annuity, what you or will plan need to take in retirement. more money early work led to • the Trusts 1995 initiation of the Department of Labor campaign now known as What you are Sworking tatement on, forand thewhat I have discussed, serve to underline Four: Have plan that an estate looks plan like it inwill place, work. prior to retirement, in case you die a lot this available in many places, but www.aarp.org also can show you what each year One: out of Assess savings. how The long tools you might I will mention live. Thisprovide can be what done people today with need many to do tools, all this "Saving Matters", and to the creation of new programs within the EBRI Education and • Discounts ERISA Advisory Council the importance of the SAVER Act, the Saving Matters campaign, the sooner work, with the but than easiest it6.your is work, Don't one projected available and quit it permanent life will on expectancy. take the a internet full lot time of time. Pretend ator www.northwesternmutual.com partthat time you employment will have to onserve the assumption : as thethe they charge for the retiree health and long-term care insurance policies Research Fund to work with partners across the nation on these important topics. First, • Cutting Back on Expenses Working Group on Preparing For Retirement ChoosetoSave® campaign, the American Savings Education Council partnership, executor of your that own youestate. can find Getemployment everything organized elsewhere and if continued in order so earned that your income job is that they sell. longevityOur game. surveys I completed suggest that the for game the last majority week and of Americans was told that this Iwill should actually expect be to a live we joined with many partners to form the American Savings Education Council (ASEC) • Long-Term Care Insurance and all other activity aimed at increasing financial literacy. I commend you for would be easy, 2. essentially Assume so that the noto real more affording executor than afull 3doesn percent or 'tpart wish real time they return retirement. had onsaid yourFor no total to better your investment or request worse that we tremendous amount of work, as most have never done a budget or documented annual to 93. My rule of thumb for people is to add 10 years to that number, so I assume 103 in program ( www.ascc.or_ ), of which I serve as Chairman and CEO. Second, we joined • Generating Income your attention to this vital matter. they agree to beare named still an in economy your will. that Don't frequently have a will? pays based That makes upon firm youspecific normal, but income flows and portfolio spending. (that There is, above are many inflation) toolsand on don't the internet forget that to aid even in this thatprocess, may be with my retirement those and and other savings partners decisions. to start the Subtract "Choose this to predicted Save®" media life expectancy public service (plus ten), • Working doesn't make it desirable. by seniority, so the next position might be equal at a much reduced salary. from including the age many at subject which at http:you // to www.choosetosave.or_ income think you taxes. wantMany to /tools retire investment /fincalcs.htnl. to determine firm sites how provide long youinformation will need announcement and web based education program ( www.choosetosave.org ). • Retirement Plan Withdrawals I would be pleased to take any questions. Dallas L. Salisbury Five: 7. Visit When on this, a bookstore. working as well on asTheir the your financial shelves financialplanning are plan, full think ofsites books about of experts that your will wealth, like assist Ricnot you Edelman your in all to support i also yourself recommend withoutthat working everyone for pay. begin This at the provides earliest aage necessary possiblelife to expectancy do all their EBRI and ASEC responded to congressional requests in 1996 and 1997 for ideas • Income From Employer Plans President and CEO, and Emp Jonathan loyee Pond. Benefit Research Institute net worth. Your wealth is tied to income. For example, is your home an of the areas listed above. Don't just read one book. Many will make the same points I number finances for with working a tool like withMicrosoft retirement money planning or Quicken and savings so that adequacy it is easy calculators, to know where as most on how to increase both public and private sector attention to these issues with • Some Tax Issues Washington, DC have made here, asset some or will liability? disagreeI think with about them, assets others as will things add that many either new produce ideas. The current as your forfinances an age 3.of are Plan planned onto a daily spend retirement bno asis. more F and orthan retirement an age 3 percent at which planning to 4 you percent this expect allows ofto your die. you total to look pool at of suggestions for what became the SAVER Act and the National Summits on Retirement • Types of Fixed April Income 9, 2001 Investments "Dummy" series income now has or that books. I amInsight willingcan andbeable gained to sell. fromMy bestsellers home does like not "Rich produce years worth This of is an income savings assessment and eachspending year that if can you patterns bewant made aashigh - you a game probability seekthat to determine canofbehaving played what it-last you at aas will very long need as Savings. EBRI and its program units worked with the Department of Labor, other • Bond Mutual Funds current income. In fact, it produces expenses that can have wide Dad:Poor Dad". Specialized books like "Living on Your Nest Egg: How to Save, Invest as a budget during you retirement. do. There are excellent studies and tools on this topic at sites like executive early age, and branch thenagencies, every few theyears, Congress, to provide and the an American ongoing input Society for calculating of Pension Actuaries savings • Annuities fluctuation, even if I own the home without debt. Just look at what and Spend for Your www.nowcprice.com Retirement" provide and www.van_uard.com, a set of planning tools. andAarticles book now at at the adequacy. Three: Steps one and two combined will cause most people to take a long pause. to design and organize the 1998 Summit, and have been working with all of them again • Home Equity \\"W\V._I_Ii i .()I_ . on printers the 2001 that Summit. I have homeowners co-authored are now with Marc facing Robinson, with gas and "Managing electricityMoney bills. in When Retirement" my bride The vastTwo: majority, Create if they or update have been your annual realistic,income will see anda spending projected budget budget to that what saysyou that • Growing What You Have and I do our financial planning we do not count the house as an asset or a starts with the 4. assumption Realize thatthat youyou willhave havealready a great retired, deal of but free may time not in retirement have done and it having that expect expectedyou retirement will have income as income is not andgoing will need to cover to spend desired during retirement the lastexpenses. year of planned What are The fact that there will be a 2001 National Summit on Retirement Savings makes • Managing Your Money completed stepsliability, like those it is noted carried above. at zero We because included wethe do following not want to sections: sell it. But, the work. some ofThen, the points taking you of are into realism likely consideration to based spend upon more your thenot life advice less expectancy, on of conservative entertainment and assuming financial and eating annual planners? out than the work on "'preparing for retirement" especially relevant. The Employee Benefit • Who Can Help? • What Will It Take to Retire? remaining mortgage is carried as a liability because we must make a inllation of about four percent (if you think the economists are correct about likely Research Institute (EBRI) is pleased that the ERISA Advisory Council has convened a workin_,_ group on preparin_ for retirement. 2