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MERRILL LYNCH STUDY SHOWS AMERICAN SAVING CRISIS GETTING WORSE; THREATENS TO DIMINISH QUALITY OF LIFE FOR FUTURE GENERATIONS

 MERRILL LYNCH STUDY SHOWS AMERICAN SAVING CRISIS GETTING WORSE;
 THREATENS TO DIMINISH QUALITY OF LIFE FOR FUTURE GENERATIONS
 NEW YORK, June 17 /PRNewswire/ -- A new Merrill Lynch study shows the saving crisis in this country is more deep-seated and far-reaching than previously believed.
 According to the Fourth Annual Merrill Lynch Retirement Planning Survey, this "poses a threat to one of the cornerstones of the American Dream -- the freedom to build a better life for ourselves and our children -- that could diminish our quality of life for generations to come."
 A key finding of this year's survey shows an increased recognition of the need to save, but little improvement in saving practices. The results indicate things are actually getting worse and that no one -- individuals, companies, or the government -- is doing enough to reverse the slide.
 "Fortunately, the average babyboomer still has time to prepare for retirement," said John L. Steffens, executive vice president, Merrill Lynch Private Client.
 "If some age 40, earning $60,000 a year, invested $3,000 after tax annually, that investment would grow to $200,000 at age 65," said Steffens. "If he were fortunate enough to have a 401(k) plan, where his company matched 50 percent of the employee's contribution, his $3,000 pre-tax annual savings would grow to about $550,000 by age 65, or more than double. Therefore, it's astounding that our retirement survey found that less than a third of all Americans who are within 20 years of retiring, take advantage of a 401(k) plan."
 Among the survey's highlights are two disturbing findings. First, babyboomers, apparently are doing even less than today's pre-retirees to prepare for retirement. Second, the survey has revealed a potential gender gap among pre-retirees, in that more women than men say they feel financially unprepared for retirement.
 As the babyboom generation ages and life expectancy increases, the population of the United States also will age dramatically. In the next 40 years, when the last of the babyboom generation reaches 65, the retired population will have risen to 65 million.
 By the year 2010, it is estimated that each person over the age of 75 can expect to pay an annual health care bill of $10,000. Yet, during the late 1980's, half of all retirees went into retirement with less than $10,000 in savings.
 According to the study, if this trend is not reversed and individuals cannot adequately prepare for retirement an increased financial burden will be placed on succeeding generations. If the current savings trend continues, over 30 million babyboomers will not be saving anything for retirement.
 As each generation therefore is forced to pay for a larger portion of the retirement costs of the preceding generation, it will become more difficult for that generation to even maintain the standard of living, let alone save for its own retirement.
 In this survey, Merrill Lynch conducted extensive telephone interviews among pre-retirees (ages 45-64), benefits managers and for the first time, members of the "babyboom" generation, who will be reaching retirement age between the years 2010 and 2030.
 Some other results in this year's survey include:
 -- The average percent of income allocated to a retirement account among pre-retirees has decreased steadily in the last three years.
 -- A higher percentage of Babyboomers than pre-retirees feel financially unprepared for retirement.
 -- Eight percent of pre-retirees said their employers offered pension or retirement plan, but only 31 percent said they participated in a 401(k) or other salary-based installment savings plan.
 -0- 6/17/92
 /CONTACT: Fred Yager of Merrill Lynch, 212-449-7355/
 (MER) CO: Merrill Lynch & Co. Inc. ST: New York IN: FIN SU: ECO


LR-SM -- NY048 -- 1104 06/17/92 13:03 EDT
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Publication:PR Newswire
Date:Jun 17, 1992
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