Economic Climate, Escalating Health Care Costs Make Saving for Retirement Difficult; Not Impossible

Before the recent economic crisis hit Americans, the National Retirement Risk Index released by the Center for Retirement Research at Boston College (CRR) last February estimated that nearly 61 percent of working Americans may not be financially prepared to retire at age 65. The rising cost of health care was one factor to blame.

The 17-point increase in the National Retirement Risk Index (NRRI) from the previous Index number of 44 percent – released in January 2007 – demonstrated how the surging cost of health care was significantly affecting retirement savings. But, as the nation’s economy continues to struggle, many Americans are beginning to cut back on their long-term financial plans due to rising costs of everyday necessities.

"Today’s economic environment plays a large factor in what steps people are taking to safeguard their future financial security,” said Brad Davis, vice president of marketing, Individual Investments Group at Nationwide Financial. "There is an even greater feeling of insecurity and vulnerability, especially during these demanding economic times. With more and more companies ceasing defined benefit plans and with mounting concerns about Social Security, some sources of expected post-retirement income may not be available to Americans. So, they need to take a more active and responsible role to secure their safe retirement.”

Education and online resources may help consumers plan for retirement and health care costs

To help consumers better prepare for retirement, Nationwide Financial Services, Inc. (NYSE: NFS) updated RetirAbility Check^SM to account for the rising cost of health care. This informative, interactive online experience aligns with the new NRRI data, which only Nationwide has exclusive access to because of its support of the retirement research being done by the CRR. Since its founding in 1998, the CRR is considered by many as an authoritative source of information and perspective on all major aspects of the retirement discussion.

"This latest update to RetirAbility Check is important because the rising cost of health care affects every retiree at some point in their lives,” Davis said. "Our free online site gives consumers an even more accurate picture of the impact of these rising costs, and enables them to consider this information as they prepare for retirement.

"Many in America have to rethink how they are going to make it to retirement, not just what to plan for when they finally do retire,” Davis said. "The Index also shows that the risk will rise for younger workers and low-income households. The Index number could be considerably higher once long-term care costs are taken into account, and if households do not plan judiciously. There are more reasons today to educate ourselves, and consider working with a financial professional on a plan that’s right for every individual’s circumstances.”

What is RetirAbility Check?

RetirAbility Check (www.nationwide.com/rscore/nrri1208) is an online, interactive resource that provides consumers with a basic retirement readiness score – called an R-Score^SM – to illustrate how financially prepared they are for retirement. For example, if a person’s R-Score is 56, he or she is on track to have 56 percent of what they need financially in retirement. A score of 100 is the goal.

First introduced in late 2006, RetirAbility Check uses NRRI data to determine the R-Score. In addition to updating the online site to account for rising costs of health care, additional changes were made, including updates to the user interface and the creation of an express mode to expedite the process for returning users.

"Nationwide translates the Index findings and implications into a consumer-friendly format that goes beyond the numbers to keep consumers engaged. RetirAbility Check takes the national index of retirement readiness to a personal level,” Davis said.

How RetirAbility Check works

To start, consumers input basic information such as birth year, earnings and any current retirement plan balances. During the process, an on-screen peer – similar in age and gender – guides the user and provides information, tips and facts along the way.

Once complete, the information provided is analyzed using assumptions and patterns of behavior identified by Boston College — including cost of living and medical expenses in retirement — and gives users their R-Score.

After getting their R-Score, users can learn about ways to improve their score, as well as access additional educational resources, tips and calculators geared to help them better prepare for retirement. The site also provides information about how an investment professional could help with retirement planning.

To get your own R-Score, visit www.nationwide.com/rscore/nrri1208.

About Nationwide Financial

Nationwide Financial Services, Inc. (NYSE: NFS), a publicly traded company based in Columbus, Ohio, provides a variety of financial services that help consumers invest¹ and protect their long-term assets, and offers retirement plans and services through both public- and private-sector employers.

It’s part of the Nationwide group of companies, which offers diversified insurance and financial services. The group is led by Nationwide Mutual Insurance Company, which is ranked No. 108 on the Fortune 500 based on 2007 revenue.² For more information, visit www.nationwide.com.

RetirAbility Check is provided for educational purposes only and is not intended as advice. All investing involves market risk, including the possible loss of principle. Neither Nationwide nor any of its representatives give legal or tax advice. Please consult with your legal or tax advisor for such guidance. Nationwide, Nationwide Financial, the Nationwide framemark and On Your Side are federally registered service marks of Nationwide Mutual Insurance Company. RetirAbility Check and R-Score are service marks of Nationwide Mutual Insurance Company.

¹ Nationwide Investment Services Corporation, member FINRA. In MI only: Nationwide Investment Svcs. Corporation.

² Fortune Magazine, April 2007

Savings Tips for Consumers

• Reduce debt. According to the Federal Reserve, consumer debt is more than $2 trillion. And according to the Fed’s 2004 Survey of Consumer Finances, the average American was carrying more than $2,000 in credit card debt alone. Try to pay off your credit cards as quickly as possible, and don’t just pay the monthly minimum. Shop around for cards with better rates.
• Control unnecessary spending. Sure that non-fat, decaf, mocha-grande-whatever tastes good but at $4 a pop, it adds up. If you bought one per day, that’s $1,460 annually. And that’s just for coffee purchases. Think about the things you buy that you can cut back on. Put that money to work for you instead.
• Have a 401(k) or similar savings program? Great! Are you withholding the bare minimum or are you "maxing” out your withholding? Consult with your plan provider to see how you might do better, what options are available and so on.
• Use online resources to help evaluate your personal financial situation. Nationwide’s RetirAbility Check^SM (www.nationwide.com/rscore/nrri1208) lets users plug in basic financial and demographic information, and returns an R-Score^SM, which is a number that tells them if they’re on track to maintain their standard of living in retirement. This engaging resource also offers personalized suggestions and tips for R-Score improvement. The R-Score is calculated using data from the National Retirement Risk Index and other metrics.
• Start the conversation about future medical costs with your doctor, your family, your investment professional and your employer. Find more information in the "Health Care” section on the Improve Your R-Score screen of RetirAbility Check.
• Seek professional help. Consider working with a licensed, qualified investment professional whose business and personal styles suit your needs.
• Start today!