By Kathryn Kretschmer-Weyland
April 25, 2011

Good news! We're living longer than ever.

According to a report released in March 2011 by the Centers for Disease Control, life expectancy in the United States increased to 78.2 years in 2009. For males, it increased to 75.7 years; for females, 80.6 years.1 In fact, life expectancies have increased by nearly four years since 1950. At age 62, many Americans can anticipate two-to-three decades of active living.2

What's good news for our health may not have a healthy effect on workers- retirement accounts. If we-re living longer, chances are our needs for lifetime income are growing too.

Workers recognize the problem. In its most recent Retirement Confidence Survey (RCS), the Employee Benefits Research Institute (EBRI) finds that "Americans- confidence in their ability to afford a comfortable retirement has plunged to a new low."3

But they-re not doing anything about it. In response to the recession, workers seem to be saying, "We can't get there from here." So they-re changing where "there" is; they-re lowering their expectations for retirement rather than making even modest changes to their savings rate. They appear to be leaving themselves very little room for error. Mayors have the opportunity to encourage city employees to save more in order to keep their retirement savings up.

For example, it's been many years since inflation was a concern in the U.S. However, the U.S. Labor Department reported its Producer Price Index for February 2011 rose 1.6 percent, the biggest increase since June 2009. The increase was led by big jumps in food and gasoline prices. The price of energy was up 3.3 percent, the fifth straight monthly increase. Food prices rose even faster, up 3.9 percent.4

Most municipal workers can expect to receive benefits from a traditional pension plan, which can form the basis for comfortable retirement income. But, most pension plans were not designed to be the sole source of lifetime income for participants, and many were not designed for retirements lasting many decades. In short: city employees who are not doing additional saving may be short-changing their chances for lifetime income that meets their needs.

Deferred Comp Makes CPR Possible

The USCM Deferred Compensation Plan is designed to help bridge the gap between employees- current resources and what they may need for lifetime income. Participants can invest tax-deferred income through the convenience of payroll deduction.* Then, in just ten minutes and a few clicks of a mouse on your plan website, your employees could:

• Set a retirement savings goal, track progress against it, and get suggestions to improve the outlook using the On Your Side Interactive Retirement PlannerSM.

• Get help with developing a personalized retirement strategy using the Morningstar® Retirement Manager SM.

• Choose investments that fit their lifestyle using Ibbotson Associates asset allocation modeling.

• Browse eWorkshops, where virtual instructors will lead employees through a series of exercises designed to help them learn about long-term investing through the plan.

• Manage their account, privately and securely.

• Get individual help from Nationwide Retirement Specialists, professionals who understand the need for CPR and how your plan can make it possible.

Given the right stimulus, workers will save. According to a Policy Brief by the Brookings Institute, programs that provide tax breaks and matching funds tend to increase participation. A great example of this is the Saver's Tax Credit, which can save qualified employees up to $1,000 as a result of saving for their retirement. Experience suggests that even low-income families will save if presented with incentives.5

Raising workers- awareness about the plan will benefit them. By reinforcing the goodwill you-re working to earn among your employees, they see your committment to everyone's success through your deferred compensation plan. And they could get the CPR they need.

City leaders should know that finding creative solutions for employers has been a hallmark of Nationwide's service to the public sector, and especially the Conference of Mayors. For more information on what Nationwide is doing to help city employees, even during difficult economic conditions, contact Kathryn Kretschmer-Weyland with the Conference of Mayors by phone at 301-460-5251 or send e-mail to kweyland@usmayors.org, or Louie Watson, Nationwide Vice President of Strategic Relationships at 614-854-8895 or send e-mail to WatsonL2@Nationwide.com.

*Keep in mind that when you take withdrawals, the money is taxed as ordinary income

©2011 Nationwide Retirement Solutions. Nationwide, the Nationwide Framemark, On Your Side and On Your Side Interactive Retirement Planner are service marks of Nationwide Mutual Insurance Company.

Nationwide Retirement Solutions (Nationwide) makes payments to The United States Conference of Mayors and its affiliate United States Mayors Enterprises for their sponsorship and the services that they perform generally for all their members related to Nationwide's products and services sold exclusively in public sector retirement markets. More detail about these payments is available at www.nrsforu.com.

Nationwide Retirement Specialists are Registered Representatives of Nationwide Investment Services Corporation, Member FINRA. In Michigan only, Nationwide Investment Svcs. Corporation. Information provided by Retirement Specialists is for educational purposes only and is not intended as investment advice.

Morningstar® Retirement Manager SM is provided by Morningstar Associates, LLC, a registered investment advisor and wholly owned subsidiary of Morningstar, Inc.

Investing involves market risk, including possible loss of principal.

The use of asset allocation and diversification as investment strategies does not guarantee returns or insulate from potential losses.

1 US Death Rate Falls for 10th Straight Year, CDC National Center for Health Statistics, March 16, 2011.

2 Can Americans Work Longer?, Joseph F. Quinn and Teresa Ghilarducci, National Academy of Social Insurance, February 2005.

3 The 2011 Retirement Confidence Survey: Confidence Drops to Record Lows, Reflecting "the New Normal", EBRI Issue Brief #355, Employee Benefit Research Institute, 2011, March 2011.

4 Wholesale Food Prices Rising At Fastest Pace Since 1974, Mark Huffman, ConsumerAffairs.com, March 16, 2011.

5 "Improving the Saver's Credit," William G. Gale, J. Mark Iwry, and Peter R. Orszag, Policy Brief #135, The Brookings Institute, July 2004.