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NEW MERRILL LYNCH STUDY MEASURES DEPTH OF BABY BOOM RETIREMENT SAVINGS CRISIS; SHOWS THEY SAVE AT ONLY ONE-THIRD THE RATE NEEDED

 NEW YORK, Jan. 27 /PRNewswire/ -- Merrill Lynch & Co., Inc. today released a detailed study showing that members of the Baby Boom generation are saving at just one-third of the rate needed to provide them with a secure retirement at age 65.
 Based on this study, the financial services company established the Merrill Lynch Baby Boom Retirement Index(SM) -- currently 33.79 percent. The index, to be updated annually, measures the rate at which the oldest Baby Boomers, those born between 1946 and 1956, are accumulating the savings they will need to retire at age 65 and maintain a standard of living consistent with pre-retirement years.
 The Merrill Lynch study suggests that unless the 76 million Baby Boomers begin to save and invest at a far higher rate in the next few years, they will be unable to retire securely at their accustomed standard of living.
 The study is the first to quantify the mounting national crisis in personal saving faced by the Baby Boom generation, the oldest of whom will turn 65 in just 18 years.
 "The clock is ticking for the entire Baby Boom generation," said John J. Steffens, Merrill Lynch executive vice president for private client. "Unless they quickly learn to start saving more, Baby Boomers simply won't accumulate enough for a secure retirement.
 "Bill Clinton is the first Baby Boomer to become President," Mr. Steffens continued. "It is vitally important that he and Congress devise policies that encourage all Baby Boomers to save and invest while they still have time."
 The study does not measure the savings habits of younger Baby Boomers -- those born between 1957 and 1964 -- because people in their late 20s to mid-30s typically are preoccupied with other financial challenges. However, the study shows, if people do not begin saving in earnest in their early to mid-40s, retirement preparation soon becomes a herculean task.
 The Merrill Lynch study is the work of B. Douglas Bernheim, John L. Weinberg Professor of Economics and Business Policy at Princeton University. Dr. Bernheim's special field of research is the economics of individual savings behavior.
 Dr. Bernheim noted that the dimensions of the Baby Boom's savings crisis will increase rapidly as the generation grows older. "The survey's findings paint a rather bleak picture," he said. "Unless Baby Boomers become far more frugal, most will have to accept dramatically lower standards of living in retirement than they enjoyed during their working years."
 Dr. Bernheim emphasized that his study understates the severity of the Baby Boom savings shortfall for a number of reasons. First, the study assumes that all of a household's financial assets will be available to help pay for retirement. In reality, the typical household must draw upon savings for a variety of other purposes -- to finance care for an elderly parent, for instance, or to pay for children's college education.
 Secondly, the average Baby Boomer is expected to live longer in retirement than earlier generations and, therefore, will need more savings at the outset. Moreover, Dr. Bernheim noted, it is entirely possible that at some future date mounting economic pressures will force both public and private employers to scale back on pensions, Social Security payments, and other important benefits that supplement personal savings in retirement.
 The Merrill Lynch study is based on a sophisticated computer model that calculates how much Baby Boom households with varying characteristics need to save throughout their adult lives in order to accumulate sufficient assets for retirement. The study compares these required savings levels with data on current savings habits obtained from recent surveys of 3,798 Baby Boom households across the United States.
 Dr. Bernheim's findings are presented according to gender, income bracket, marital status, and pension coverage. They are based on conservative assumptions about individual economic behavior over the course of a lifetime and include anticipated changes in Social Security and private pension benefits, as well as other economic variables, such as interest rates, inflation, economic growth rates and tax rates.
 One important pattern that emerges from the Merrill Lynch study is that households not covered by a private pension plan need to accumulate far more in personal savings than households that are covered by pensions. For example, the typical married couple with joint earnings of $75,000 at age 35 would need savings of at least $368,000 (in current dollars) by age 65 if one member were covered by a private pension. If there were no pension coverage, they would need to accumulate $483,000.
 In general, the more income a household has, the greater the percentage of earnings it needs to save. Older households also need to save more.
 Copies of the Merrill Lynch study are available upon request, along with tables detailing the savings needs and characteristics of different types of households.
 -0- 1/27/93
 /CONTACT: Fred Yager of Merrill Lynch & Co., Inc., 212-449-7355/
 (MER)


CO: Merrill Lynch & Co., Inc. ST: New York IN: FIN SU: ECO

SM-OS -- NY045 -- 9586 01/27/93 11:19 EST
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Date:Jan 27, 1993
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