Debt the New Retirement Savings Enemy?

April 1, 2008 (PLANSPONSOR.com) - A new survey found that 43% of non-retirees said debt affects their ability to save for a comfortable retirement "a great deal," while 32% of non-retirees said debt forced them to cut back their retirement savings.

A Securian Retirement news release reported that more than half of retirees (52%) acknowledged they were in debt when they retired. Those with the heaviest debt loads were also the most likely to pronounce themselves financially insecure.

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“It’s understood that Americans have debt, but what’s surprising is the impact of debt on their ability to prepare financially for retirement,” said Kerry Geurkink, director, Annuity Marketing for Securian Retirement, in the release. “Finding the right balance between today’s living and tomorrow’s security becomes more challenging when consumers either don’t acknowledge or simply don’t understand the extent of their debt.”

According to the news release, more than half of retirees surveyed retired with non-mortgage debt, and 23% said their debt equaled or surpassed their savings and investments at retirement. Twenty-six percent of Boomers and 33% of Silents (born 1925-1945) expected to carry non-mortgage debt into retirement.

Respondents indicated their top two financial goals are paying off debt and saving for retirement (or, for retirees, ensuring a comfortable retirement for the rest of their lives). While seven in 10 respondents said disposing of debt is a high priority, only four in 10 actually paid down more debt than they added during a 12-month period.

Debt – The Blind Spot on America’s Road to Retirement is a multigenerational study conducted for Securian by Washington D.C.-based Mathew Greenwald & Associates. Respondents came from Generations Y and X, plus Baby Boomers and members of the Silent Generation and included more than 2,000 working and retired Americans.

Sovereign Wealth Funds Enjoy 18% Asset Increase

March 31, 2008 (PLANSPONSOR.com) - Rising oil prices and Asian countries' growing trade surpluses helped drive an 18% increase in sovereign wealth funds to $3.3 billion in 2007, a total that is expected to reach $10 trillion by 2015, a new report said.

Including other sovereign investments, such as pension reserve funds or funds owned by state-owned corporations and other official foreign exchange reserves, sovereign funds in a broader sense hit $14.7 trillion in 2007, International Financial Services London (IFSL) said in a report, according to Reuters.

Sovereign wealth funds now have assets between $1.9 trillion and $2.9 trillion and this could grow to $15 trillion in the next eight years, according to U.S. Treasury estimates. The International Monetary Fund (IMF) estimates that sovereign wealth funds could reach $6 trillion to $10 trillion by 2013.

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IFSL, a London think tank, said non-commodity sovereign funds doubled their total assets from three years ago to $1.2 trillion last year. They may see their share of global sovereign funds increase to 40% by 2010 and 50% by 2015, up from 36% in 2007, IFSL said.

Since the start of the credit crisis, sovereign funds, mostly from Asia, have invested more than $60 billion in U.S. and Swiss banks, IFSL said, according to Reuters. (See Wall Street Shores Up Finances With Overseas Capital )

As the rising class of state-controlled investment funds in the Middle East and Asia bails out western financial institutions, politicians and business leaders in the United States and Europe have proposed laws to make it harder for these funds to take over flagship companies.

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