Approximately 67 percent of West Virginians entering retirement are at high risk of outliving their retirement savings, according to an Ernst & Young economic study released Monday.

“Many Americans envision a leisurely retirement where their lifestyle continues much as before,” said Tom Neubig of Ernst & Young. “Our work shows that this is not a realistic expectation and that, with the current state of savings, retirees will have to cut back far more on expenditures than they had ever expected.”

The study, commissioned by the Americans for Secure Retirement coalition, also finds that in order to not outlive savings, the average West Virginia household will have to reduce their standard of living by 30 percent.

“This reduction will be necessary even when assuming that retirees can maintain the same standard of living with income equal to 59 to 71 percent of their pre-retirement wages,” Neubig said.

The study finds that retirees in West Virginia are much better prepared to have a financially secure retirement if they have a guaranteed source of retirement income beyond Social Security, such as annuities and defined benefit plans.

“For example, West Virginia residents who have a guaranteed source of retirement other than Social Security have a 20 percent chance of outliving their assets if they retain their pre-retirement standard of living,” Neubig said. “Those with Social Security as their only guaranteed income have an 85 percent chance of outliving their assets during retirement.”

Americans for Secure Retirement is a coalition of over 50 member and affiliate organizations representing women’s, small business, agriculture, Hispanic and African American groups as well as the life insurance industry.

The coalition is committed to raising awareness about retirement challenges facing Americans and advocating for policies that help Americans secure a steady stream of income for their retirement.

“As a guaranteed source of retirement income, life annuities relieve the risks and burdens of managing a nest egg and can maximize savings’ value over the course of an individual’s retirement years,” said Joe Reali, chairman of the coalition. “Life annuities are the only vehicle besides pensions and Social Security that provide a steady stream of income for life.”

Other key findings of the study include:

Over three-quarters of middle-income West Virginia households seven years from retirement (near retirees) can expect to outlive their financial assets if they attempt to maintain their pre-retirement standard of living.

Nearly seven of 10 middle-class West Virginia new retirees can expect to outlive their financial assets.

Nine out of 10 near retirees and more than eight out of 10 new retirees without an employer pension plan in West Virginia are likely to outlive their assets.

Married couples are more likely to outlive their financial assets, due to their longer joint life spans, than single households. Single females are more likely to outlive their assets than single males.

Near retirees in West Virginia would have to reduce their standard of living on average by 42 percent to reduce the likelihood of outliving their financial assets (failure rate) to only 5 percent.

New retirees in West Virginia would have to reduce their standard of living on average by 30 percent to reduce the likelihood of outliving their assets to only a 5 percent failure rate.

“We have a retirement crisis in this country. The findings of this report underscore that the public policy debate on retirement needs to increasingly focus on how to help Americans manage their retirement savings so that they last throughout retirement,” said Reali. “This includes pursuing policies that encourage retirement vehicles that provide retirees with steady streams of income for their retirement.”

Legislation currently before Congress, The Retirement Security for Life Act (H.R. 2205/S. 1010), would encourage Americans to secure a steady stream of income in retirement through annuitization, Reali said.

“The bills will encourage Americans to have a steady source of guaranteed income in retirement providing a tax incentive for lifetime annuities,” he said. “Specifically, this legislation would exclude 50 percent of the income received from a lifetime annuity from taxation, up to $20,000 per year. For an average American taxpayer in the 25 percent tax bracket, this would result in $5,000 of tax savings.”

The legislation, introduced by Sens. Gordon Smith, R-Ore., and Kent Conrad, D-N.D., in the Senate and Reps. Stephanie Tubbs-Jones, D-Ohio, and Phil English, R-Pa., has the support of 70 co-sponsors in the House and 12 in the Senate.

For more information about the ASR and the study, visit the online Web site at www.paycheckforlife.org.

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