New York (March 29, 2004) — Some 50 percent of retirement plans fail because the real rate of return is not considered, according to Matt Sharpe, senior vice president of retirement income marketing at GE Financial.

"A few years ago, the real rate of return on equities was 10 percent,” Sharpe said. “This is now down to 7 percent, and if you weigh in an inflation of 3 percent, you are really talking about 4 percent."

Sharpe was part of a roundtable discussion held here that looked at the challenges facing American pre-retirees and retirees that he claimed is unlike anything seen by prior generations. "And, Americans do not appear to be seeking the right help."

Pamela Schutz, vice president of GE, and president and chief executive of GE's Life and Annuity Assurance Co., pointed out that Americans have "unrealistic expectations." She said that less than one in four Americans today between the ages of 40 and 59 have saved at least $100,000 toward retirement. Frank Gencarelli, executive vice president of the retirement service group, added that 47 percent of workers and 40 percent of retirees have saved less than $50,000, "and the government is not going to fill in the gaps."

The answer to the predicament, stressed Norm Mindel, a certified financial planner and executive vice president of GE Financial Independent Accountants Network, is that people have to refocus their direction and beliefs. "Americans do more accumulating of money than anybody else in the world, but we do not put enough of what is accumulated in the right vehicles." In that respect, Mindel raised the matter of annuities, citing a recent survey which showed that only 3 percent of respondents used annuities in the context of retirement income planning.

He noted that GE Financial has recently launched its GE Retirement Answer, a retirement annuity plan, but the problem was that although people understood the concept of retirement income planning, only one in four sought the assistance of a professional financial planner.


-- Stuart Kahan

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