Older baby boomers are saving barely one-third of what they need for retirement, according to a study sponsored by Merrill Lynch & Co.
The giant brokerage hailed the study as the first to quantify the severity of the boomers' savings woes.
The study, conducted by a Princeton University economics professor, will be incorporated in Merrill's efforts to sell investment products to people in their 30s and 40s. This population group is a prime target for both brokerage houses and banks.
Merrill also plans to use the study in its lobbying efforts. The firm wants Congress to offer more tax incentives for investment products geared to retirement, such as individual retirement accounts, and to step up support of education about the need to save for retirement.
The centerpiece of the new study is the "Merrill Lynch Baby Boom Retirement Index," which tracks the savings of people ages 37 through 47.
100% Isn't Enough
The index projects the savings that the group will have accumulated by retirement, based on current savings rates, and expresses the sum as a percentage of what the people need to maintain current living standards. Right now, it stands at a meager 33.79%.
"The object really isn't to get it to 100%, but significantly higher than 100%," said B. Douglas Bernheim, the Princeton professor who led the study.
He explained that the index assumes that every penny saved remains available for retirement funding. …