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Equity market performances contribute to Americans' decisions of when to retire

Posted On Thu, July 21, 2011

A new studied published by the University of Missouri and sponsored by Prudential Financial highlights the factors that contribute to retirement decisions.

The study, conducted by Professor Rui Yao, found that U.S. citizens are more likely to retire after durations of strong equity market performance, if they're participating in a defined benefit pension plan or after the retirement of a significant other.

"The study clearly shows that the stronger the equity market performs over any period, the more likely it is that near-retirees will, in fact, retire," Yao said. "A 10 percent increase in the S&P 500 index results in a 25 percent increase in the likelihood that individuals will retire, compared to a year in which the S&P 500 index performance was flat- all other factors being equal."

The study showed that from 1926 to 2010, equity markets are more prone to go down in the year following a three-year rise. Americans are more apt to retire during a time when there's a greater risk of their retirement assets decreasing in value.

Choosing the right time to retire can be difficult, but an experienced financial advisor can help appraise finances and go over options like annuity rates and other retirement savings choices.

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