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By Sarah Olesen, Australian National University and Peter Butterworth, Australian National University

Welcome to Shades of Grey, a series from The Conversation that examines the challenges posed by Australia's ageing workforce. Today, Australian National University's Sarah Olesen and Peter Butterworth look at the issue of mental health and well-being in retirement.

Community views on retirement are polarised. Some see it as an opportunity to escape work obligations and pursue their own passions. Others view the transition as a loss of status, social connectedness, and financial security.

We've studied this topic using large samples of Australians to explore how retirement is associated with mental health and well-being.

The view that retirement has a negative effect on mental health is consistent with decades of evidence about the impacts of job loss among young and middle-aged people. And the transition to retirement is certainly a major milestone and lifestyle change, given the central roles work and career play in most people's lives.

Studies comparing the mental health of retirees with that of working older adults has shown that retirees (particularly men) tend to have greater levels of depression and anxiety than their working peers.

But longitudinal studies that track the mental health of people moving from work to retirement offers little proof that this transition has a significant detrimental impact on the mental health of most people. Indeed, it seems more likely that the poor mental health observed among many retirees precedes and perhaps has driven their workforce exit.

The reasons for retirement, whether people left work gradually or continue to work in some capacity during retirement, and the age at which people leave work have all been shown to affect mental health among retirees.

Not surprisingly, involuntary or unexpected job loss in later life is the form of retirement that has been most consistently linked to increased depression. On the other hand, part or gradual retirement (rather than full departure from the workforce) may ease the stress associated with leaving the workforce.

We are all familiar with the popular image of early retirement being a luxury enjoyed by financially secure individuals who lead full and satisfied lives. However, contrary to this widely held idea research shows that early retirees tend to have much poorer mental health than their working peers and older retirees.

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Retirement: a trigger for distress or welcome relief from the rat race?

Today's conventional wisdom may say Americans are worried about retirement, but an increasingly sizable percentage of consumers may not be doing much about it.

According to the New Retirement Mindscape 2012 City Pulse index, a survey released last week by Ameriprise Financial, only 70 percent of U.S. consumers report preparing for retirement. That's the lowest level recorded by the index in the past three years.

However, there were some bright spots in the survey, which surveyed consumers between the ages of 45 and 70. Residents of some metro areas reported higher than average levels of retirement preparedness and confidence. Hartford-New Haven topped the ranking of 30 metro areas, while Washington D.C. fell to the bottom spot.

The index polled consumers from the 30 largest metro areas in the United States to determine which residents were most prepared and most confident in their ability to retire. These five metro areas formed the top of the 2012 rankings.

Hartford-New Haven jumped in ranking from number six in 2011. Three in four respondents in the area say they have set money aside for retirement, and more than half invest money in an employer-sponsored plan such as a 401(k). Seventy percent of the region's residents said they have positive feelings about retirement.

With the exception of Minneapolis-St. Paul, all the other metropolitan areas in the top five spots were in the top 10 from last year. The Minnesota metro area climbed 15 spots from number 18 in 2011. Meanwhile, the greater San Francisco area, which held the number one position last year, saw its ranking drop slightly to number four.

On the other end of the spectrum was Washington D.C. where only 12 percent of residents reported feeling very financially prepared for retirement.

In addition to retirement preparedness and confidence, the index surveyed consumers on issues surrounding the upcoming presidential election.

Consumers appear to be keyed into several issues that could impact their retirement readiness. According to the index survey, a significant percentage of respondents note that candidate positions on the following issues are likely to influence their vote.

Concerns regarding these issues likely parallel the uneasiness many consumers feel about their own ability to retire.

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Sweating retirement? Your peers may not be

retirement

As the clock ticks and retirement looms, millions of Americans are worried. Thanks to a combination of overspending, undersaving and damage caused by the recent financial crisis, too few have saved too little for their golden years. The crisis has also caused retirement planning to be less of a priority for most citizens who are trying to make ends meet.

Alfonso Canella says the resulting retirement crisis should be obvious to everyone. The senior lecturer at the Brandeis International Business School in Waltham, Mass., says most workers will build their retirement on the principal of their savings, not on investment returns. Retirement planning should not be pushed to the bottom of your to-do list. His message is that people must start saving immediately and must squirrel away more than they think they will need.

As he says, "It's that simple."

The recent financial crisis has had a major impact on all aspects of the retirement system -- defined contribution plans, such as 401(k) plans, as well as defined benefit plans, or pensions. What is most problematic from your point of view?

The largest problem is the woeful undersaving in the private and public sectors. If you have a defined contribution plan, or DC, which is the plan where you put away pretax dollars into, say, a 401(k) plan. These plans, which are most prevalent in the private sector, allow a worker to contribute up to $22,500 per year pretax. (Editor's note: The limits are $17,000 for workers up to age 50 and $22,500 for workers 50 and older.)

Despite this significant tax advantage, most people don't maximize their contributions or, for that matter, even contribute. According to Fidelity Investments, its average 401(k) plan balance as of June 2012 was $72,800. If you use a rule of thumb that you must start with about $100,000 to get $5,000 per year in sustainable income during retirement, these savings are not enough. While many have additional pension income coming to them, be it from Social Security, individual retirement accounts, or some other plan, the numbers underscore what we all suspect: Americans are not saving as much as they should, especially for retirement.

The situation is somewhat similar for public-sector workers. These workers usually have a defined benefit plan, or DB, which pays benefits based on salary and length of service. In many cases -- too many, actually -- these workers face some underfunded pension plans. According to Boston College's Public Plans Database, the average funded ratio across all public plans in the U.S. in 2010 was about 77 percent. This ratio, which summarizes how much has been put away as a percent of projected payouts, summarizes the shortfall.

How can individual investors get ahead? Should they change their asset allocation strategy? How should they allocate their assets among stocks and bonds?

As I said previously, it is clear that workers must start saving as much as possible, especially taking advantage of tax-driven plans such as 401(k)s, IRAs and Roth IRAs. Let's face it: In these volatile markets, you will retire mostly on the principal of your savings and not because you made a killing in your investments.

Originally posted here:
Key to retirement success is simple

MINNEAPOLIS, Sept. 26, 2012 /PRNewswire/ --On September 26, 2012, The Derivative Project, a Minnesota based, independent, non-partisan, retirement investor advocacy organization, announced today it has submitted a request to the Securities and Exchange Commission, Chairman Shapiro, for immediate action on two requests to protect retirement savings in money market funds that carry systemic risk, as outlined by the Federal Reserve Bank of New York in an April 2012 Report on "Shadow Banking."

In this request, The Derivative Project stated, "While a study, by the Financial Oversight Stability Council on how best to control the systemic risk that is inherent in the non-transparent money market mutual fund industry is being conducted, it is imperative that our nation's retirement savings be removed immediately from all money market mutual funds, carrying systemic risk, and moved to FDIC-insured sweep options. The yield will be greater for retirement investors in these sweep options and the risk will be less for the retirement investor."

Further, The Derivative Project requested that in addition to the SEC mandating that Retirement Fund providers replace money market mutual fund options with FDIC insured sweep accounts, a request was made to allow retirement savers at 401k's and 403B's (and SEP and Individual Retirement Accounts) the option to invest directly in FDIC bank CDs in the maturity of their choice or in U.S. Treasury securities, at Treasury Direct, with no additional fees charged by the retirement service provider. Retirement savers, in this historically low interest rate environment, deserve direct access to money market instruments; such as FDIC insured bank CD's and Treasury Direct, to ensure a positive return without systemic risk.

The Derivative Project also submitted this request for comment by each member of the SEC Investor Advisory Committee at their next regularly scheduled meeting, September 28, 2012. The Derivative Project will publish the Investor Advisory Committee Member's responses, following the Meeting.

The full text of this SEC Request will be made available at The Derivative Project's website http://www.thederivativeproject.com.

The Derivative Project is a non-partisan, Minnesota - based retirement investor advocacy organization that seeks to ensure the long-term stability of the U.S. economy through equitable enforcement, for both individuals and corporations, of financial laws and regulations. It is the only non-partisan, independent retirement investor advocacy organization in the United States.

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The Derivative Project Requests SEC Move Retirement Cash to FDIC Sweep Accounts.

WEST DES MOINES, Iowa--(BUSINESS WIRE)--

Sammons Retirement Solutions, Inc.SM, which specializes in designing straightforward, innovative retirement solutions focused on IRA rollovers and other retirement assets, announced that William Lowe, President of Sammons Retirement Solutions, Inc. has been appointed to the Insured Retirement Institute (IRI)s Board of Directors. This appointment marks Lowes second term on the board, as he previously served while CEO of U.S. Annuities at ING U.S.

Lowe, an insurance industry veteran, brings over 25 years of leadership experience in the life insurance and annuity business to the board. Lowe is a product innovator and has spent decades developing products and go-to-market strategies for 401(k)s, variable and fixed annuities, life insurance, managed accounts and mutual fund accounts. He joins the company of 19 notable financial industry experts on the board.

We are delighted to welcome Bill back as a member of the IRI Board of Directors, IRI President and CEO Cathy Weatherford said. During the next year, in an effort to serve a diverse and growing membership, we will strive to provide new tools and resources to our members and expand our influence to achieve advocacy goals on behalf of the insured retirement industry. As we work to tackle these objectives, strategic direction from industry leaders such as Bill will be vital to our success.

It is an honor to be named to IRIs Board of Directors, said William Lowe, President of Sammons Retirement Solutions, Inc. IRIs mission to serve as a respected resource for financial advisers and to further enhance consumer confidence in the value of retirement strategies is also a primary goal at Sammons Retirement Solutions, Inc., and I look forward to helping advance initiatives in this area as a member of the Board of Directors.

Additionally, Lowe recently contributed to the dialogue at the IRI 2012 Annual Meeting moderating a panel entitled, Navigating Environmental Factors: Products and Strategies, that discussed the effects that current financial environmental factors can have on the industry and how companies can position their product portfolio moving forward.

About Sammons Retirement Solutions, Inc.SM(SRSI SM)

A member of Sammons Financial Group, Sammons Retirement Solutions, Inc.SM specializes in designing straightforward, innovative retirement solutions that address the increasingly complex needs of todays investors. The company complements Sammons Financial Groups existing business by expanding the product line with mutual fund IRA platforms and variable annuities available for sale through independent broker-dealers and financial professionals. Please visit http://www.srslivewell.com for additional information.

About the Insured Retirement Institute

The Insured Retirement Institute (IRI) is a not-for-profit organization that for twenty years has been a mainstay of service, commitment and collaboration within the insured retirement industry.Today, IRI is considered to be the authoritative source of all things pertaining to annuities, insured retirement strategies and retirement planning. IRI proudly leads a national consumer education coalition of nearly twenty organizations and is the only association that represents the entire supply chain of insured retirement strategies: Our members are the major insurers, asset managers, broker dealers, and more than 150,000 financial professionals. IRI exists to vigorously promote consumer confidence in the value and viability of insured retirement strategies, bringing together the interests of the industry, financial advisors and consumers under one umbrella. IRIs mission is to: encourage industry adherence to highest ethical principles; promote better understanding of the insured retirement value proposition; develop and promote best practice standards to improve value delivery; and advocate before public policy makers on critical issues affecting insured retirement strategies and the consumers that rely on their guarantees. Visit http://www.IRIonline.org today to experience the vast resources of the Insured Retirement Institute for yourself.

As the clock ticks and retirement looms, millions of Americans are worried. Thanks to a combination of overspending, undersaving and damage caused by the recent financial crisis, too few have saved too little for their golden years. The crisis has also caused retirement planning to be less of a priority for most citizens who are trying to make ends meet.

Alfonso Canella says the resulting retirement crisis should be obvious to everyone. The senior lecturer at the Brandeis International Business School in Waltham, Mass., says most workers will build their retirement on the principal of their savings, not on investment returns. Retirement planning should not be pushed to the bottom of your to-do list. His message is that people must start saving immediately and must squirrel away more than they think they will need.

As he says, "It's that simple."

The recent financial crisis has had a major impact on all aspects of the retirement system -- defined contribution plans, such as 401(k) plans, as well as defined benefit plans, or pensions. What is most problematic from your point of view?

The largest problem is the woeful undersaving in the private and public sectors. If you have a defined contribution plan, or DC, which is the plan where you put away pretax dollars into, say, a 401(k) plan. These plans, which are most prevalent in the private sector, allow a worker to contribute up to $22,500 per year pretax. (Editor's note: The limits are $17,000 for workers up to age 50 and $22,500 for workers 50 and older.)

Despite this significant tax advantage, most people don't maximize their contributions or, for that matter, even contribute. According to Fidelity Investments, its average 401(k) plan balance as of June 2012 was $72,800. If you use a rule of thumb that you must start with about $100,000 to get $5,000 per year in sustainable income during retirement, these savings are not enough. While many have additional pension income coming to them, be it from Social Security, individual retirement accounts, or some other plan, the numbers underscore what we all suspect: Americans are not saving as much as they should, especially for retirement.

The situation is somewhat similar for public-sector workers. These workers usually have a defined benefit plan, or DB, which pays benefits based on salary and length of service. In many cases -- too many, actually -- these workers face some underfunded pension plans. According to Boston College's Public Plans Database, the average funded ratio across all public plans in the U.S. in 2010 was about 77%. This ratio, which summarizes how much has been put away as a percent of projected payouts, summarizes the shortfall.

How can individual investors get ahead? Should they change their asset allocation strategy? How should they allocate their assets among stocks and bonds?

As I said previously, it is clear that workers must start saving as much as possible, especially taking advantage of tax-driven plans such as 401(k)s, IRAs and Roth IRAs. Let's face it: In these volatile markets, you will retire mostly on the principal of your savings and not because you made a killing in your investments.

These investments should be diversified across asset categories -- equities, bonds, foreign investments and real estate (this being mostly one's home). Within these asset categories, there are different risk levels. Some equities, usually in new industries or in young companies, have more volatile returns than equities in more traditional industries or well-established companies.

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The Key to Retirement Success is Simple

Workplace retirement plans for pro athletes

You might not think pro athletes earning millions would have to worry about the risk of outliving their retirement savings. But when you consider their retirement could conceivably stretch 50 years or more, that risk isn't so far-fetched.

Even with the most popular major sports leagues offering such benefits as pensions and 401(k) plans with employer matches, an athlete's relatively short career could make it hard to save adequately using those plans alone.

"They're not going to be able to put away in qualified retirement plans enough money to live on," says Andre Mirkine, president of the Sports Financial Advisors Association. (Qualified plans refer to those with tax advantages.)

"Then it's incumbent upon the advisers who advise them to try to convince them to save," he adds.

Sometimes, former athletes run out of retirement savings chasing after wild investment deals, says Pete D'Arruda, a Cary, N.C., financial planner who frequently advises athletes.

"Many athletes take a lot more risk than they should after their playing careers," D'Arruda says.

Players in these seven sports organizations, at least, have a formal employer-provided benefit plan to get them started. But data from players unions and collective bargaining agreements show that, when it comes to retirement security, the playing field is decidedly uneven.

Baseball was the first U.S. pro sport to have a pension plan, starting in 1947. Today, players become eligible for the minimum pension after just 43 days of service time at the major league level.

MLB pensions are reputed to be among the most generous in sports. Players accrue full pension benefits when they achieve 10 years of service time, making them eligible for $200,000 a year for life (the maximum allowed by law in 2012) at the age of 62. The pension is joint-survivor, meaning surviving spouses are entitled to some pension benefits. In addition, MLB members with four or more years of major league service time are eligible to continue their health care coverage at a cost of at least 60 percent of their chosen plan.