Watson Wyatt announced that its Retirement Income Target (RIT) product is based on the notion that investors may actually need 105% of their pre-retirement money to maintain living standards – much more than the 70% to 80% traditional estimates (see Planning Ahead: Are Expert Assumptions Faulty?).
That’s why the RIT provides for early retirement, inflation, and rising medical costs, the company said. Many financial planners have pointed to those three factors as eating up a lot of retirement money early on and leaving retirees short for cash.
Watson Wyatt said the RIT tool is designed primarily to help employers determine if their current retirement program will help them keep their standard of living.
It also helps define retirement income targets, which can aide in communication and education for employees, according to the consulting firm. The tool is easily customized for most types of defined benefit, defined contribution and post-retirement medical plans, Watson Wyatt said. Results, which are shown graphically, also incorporate Social Security and personal savings.
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