Personal Savings Plans Likely to Offer Workers More Risk than Reward, Says S&P Report

Even with mandated personal accounts a part of any social security reform package, average workers are likely to have difficulty saving enough capital to enjoy comfortable retirements, according to research recently published by Standard & Poor's. The article, entitled "Can People Save Enough?," is part of a special report on social security, corporate pension plans, and retirement savings that will appear in CreditWeek, Standard & Poor's weekly magazine on credit issues on March 30, 2005.

On average, personal accounts may be attractive, the report notes, if investments are profitable and risks become rewards. But because risks are borne by individuals and will not be shared, the results for many investors will be disappointing and will likely produce negative consequences.

...David Blitzer, author of the report and Managing Director and Chairman of the Index Committee at Standard & Poor's, ... drew these conclusions by looking at two simulation models using key investment data from 1945-2004....

According to one simulation model, an individual making $40,000 a year following a typical investment strategy could end up with more than a million dollars or nothing at all. A more aggressive investor could end up with more than $6 million or nothing. Given the risks in the market, not all aggressive savers will retire with ease.

--YubaNet.com; also see this short item from MarketWatch

Standard & Poor's? What a bunch of stinkin' commies.