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TIAA-CREF CEO Roger Ferguson Calls for a Holistic American Retirement System.

Outlines Principles for Bolstering Workers' Lifetime Financial Security

CHICAGO -- In a keynote speech to the American Council of Life Insurers today, Roger W. Ferguson, Jr., President and CEO of TIAA-CREF, offered a five-point prescription to help provide all Americans with lifetime financial security.

"We must seize this moment - as the economy shows signs of recovery - to build a retirement system that can help Americans live their retirement years with dignity, and without fear running out of money," said Mr. Ferguson, who heads the nation's largest private retirement system. "Right now, we don't have a system. We have a patchwork of supplemental accounts and Social Security. And the components are under considerable stress."

"America needs a holistic retirement system. We need a system that helps people save safely while they are working, and then provides an amount of income in retirement that they can't outlive and that is sufficient to their needs - to guarantee the well-being of retirees and their surviving spouses or dependents," he continued.

Ferguson noted that America's largest generation of 78 million is on the cusp of retirement; many have not managed their savings to last a lifetime, and were never given the tools to do so.

Mr. Ferguson outlined the following principles for a more effective approach to retirement:

1. Guaranteed Lifetime Income

"A holistic retirement system should provide an affordable fixed annuity that guarantees enough income to meet basic needs.1 The payout mechanism can include the option to provide monthly income for a surviving spouse or dependent," said Ferguson.

This income gap is demonstrated by spending versus Social Security payments, with the average monthly Social Security payment for retired workers at about $1,1602 and average monthly spending for individuals over 65 at about $3,044.3

2. Full Participation and Adequate Funding

"Second, we must ensure that everyone benefits. In a holistic retirement system, every employee would be eligible immediately and enrolled automatically, on their first day of work.

"To build sufficient savings, and achieve an income replacement ratio of 70%, contributions in the range of 10% to 14% percent are needed. To help people save more, the system would also include automatic savings provisions and auto-escalation programs that tie savings increases to salary increases."

3. Broad Diversification

"The third principle is diversification to help manage risk.4 More than 20 options can actually paralyze investors, or cause them to select funds haphazardly, and construct portfolios that are less diversified.5

"A menu of 15 to 20 options is generally adequate and should include a target-date life-cycle fund as the default investment, a guaranteed annuity option and the ability to invest in alternative asset classes such as commodities, real estate and private equity."6

4. Education and Advice

"More can be done to improve financial literacy. But what people really need is objective, noncommissioned advice to build a diversified portfolio consistent with their goals and risk tolerance."

A recent TIAA-CREF Institute survey7 shows that investors in higher education who are approaching retirement age are focused on assuring an income that can maintain their standard of living.

* Nearly 9 in 10 (87%) said that advice about retirement income strategies is important to them.

* Within the past two years, 60% of respondents have sought out objective retirement planning advice.

5. Retirement Health Care Savings

"Any initiative designed to promote retirement security must give people ways to amass the savings they will need for health care expenses. Without an employer-sponsored health plan, a couple retiring at age 65 today is projected to need between $210,000 and $807,000 to supplement Medicare and cover their out-of-pocket health care expenses during retirement.8

"Our clients in the not-for-profit community have told us that they are concerned about this issue, which is why TIAA-CREF introduced a retirement health care savings plan as part of our offering."

In conclusion, Ferguson noted, "Taking good care means doing more than opening an account for someone. It means providing them with options to save. It means helping participants through 30 years of retirement, not just 30 years of work."


TIAA-CREF ( is a national financial services organization with $374 billion in combined assets under management (as of 6/30/09) and is the leading provider of retirement services in the academic, research, medical and cultural fields.

You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877-518-9161, or go to for a current prospectus that contains this and other information. Please read the prospectus carefully before investing.

TIAA-CREF products may be subject to market and other risk factors. See the applicable product literature, or visit for details. Annuity guarantees are based on the claims paying ability of the issuer. Past performance does not guarantee future results.

TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.

[c]2009 Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF), New York, NY 10017.


1 Guarantees would be based upon the claims paying ability of the issuing company.

2 $1,159.50 as of July 2009. Source:

3 Bureau of Labor Statistics 2007 Consumer Expenditure Survey. Average annual expenditures for individuals over 65 total $36,530.

4 Diversification is a technique to help reduce risk. There is no absolute guarantee that diversification will protect against a loss of income.

5 Crane, Roderick, Michael Heller, and Paul Yakoboski. "Defined Contribution Pension Plans in the Public Sector: A Best Practice Benchmark Analysis." TIAA-CREF Institute. April 2008.

6 There are risks associated with investing in securities including loss of principal.

7 Yakoboski, Paul J. "Retirement Savers Respond to the Market Meltdown." TIAA-CREF Institute. September 2009 and the "Approaching Retirement Survey." TIAA-CREF Institute September 2009.

8 Employee Benefit Research Institute (EBRI), June 2009.
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Date:Oct 19, 2009
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