Retirement Income Adequacy

'I think I'm never going to be able to retire'

2010-09-09T07:39:00.001-07:00

Back on your feet? Focus on savings: experts

2010-09-09T07:38:00.001-07:00

Survey shows increasing concern over personal finances

2010-08-03T05:48:00.001-07:00

http://www.dallasnews.com/sharedcontent/dws/bus/columnists/pyip/stories/DN-moneytalk_19bus.ART.State.Edition1.1aa486e.html

The 2010 Retirement Confidence Survey: Confidence Stabilizing, But Preparations Continue to Erode

2010-03-25T10:56:00.000-07:00

EBRI

Executive Summary

20TH ANNUAL RCS: The 2010 Retirement Confidence Survey—the 20th annual wave of this survey—finds that the record-low confidence levels measured during the past two years of economic decline appear to have bottomed out. The percentage of workers very confident about having enough money for a comfortable retirement has stabilized at 16 percent, which is statistically equivalent to the 20-year low of 13 percent measured in 2009 (Fig. 1, pg. 7). Retiree confidence about having a financially secure retirement has also stabilized, with 19 percent saying now they are very confident (statistically equivalent to the 20 percent measured in 2009) (Fig. 2, pg. 8).

Worker confidence about paying for basic expenses in retirement has rebounded slightly, with 29 percent now saying they are very confident about having enough money to pay for basic expenses during retirement (up from 25 percent in 2009, but still down from 34 percent in 2008) (Fig. 3, pg. 9).

PREPARATIONS STILL ERODING: Fewer workers report that they and/or their spouse have saved for retirement (69 percent, down from 75 percent in 2009 but statistically equivalent to 72 percent in 2008) (Fig. 11, page 14). Moreover, fewer workers say that they and/or their spouse are currently saving for retirement (60 percent, down from 65 percent in 2009 but statistically equivalent to percentages measured in other years) (Fig. 13, pg. 15).

MORE PEOPLE HAVE NO SAVINGS AT ALL: An increased percentage of workers report they have virtually no savings and investments. Among RCS workers providing this type of information, 27 percent say they have less than $1,000 in savings (up from 20 percent in 2009). In total, more than half of workers (54 percent) report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000 (Fig. 14, pg. 16).

CLUELESS ABOUT SAVINGS GOALS: Many workers continue to be unaware of how much they need to save for retirement. Less than half of workers (46 percent) report they and/or their spouse have tried to calculate how much money they will need to have saved for a comfortable retirement by the time they retire (Fig. 23, pg. 22).

AMERICANS EXPECTING TO WORK LONGER: Although the age at which workers report they expect to retire shows little change from 2009, a longer-term look finds significant change. In particular, the percentage of workers who expect to retire after age 65 has increased over time, from 11 percent in 1991 to 14 percent in 1995, 19 percent in 2000, 24 percent in 2005, and 33 percent in 2010 (Fig. 29, pg. 28).

INSTITUTIONAL CONFIDENCE LAGGING: Americans continue to lack confidence in institutions. Just 19 percent of workers and 22 percent of retirees report they are very confident about banks, while 12 percent of workers and 13 per-cent of retirees say they are very confident about insurance companies (Fig. 19, pg. 19). They are most likely to express confidence in private employers (23 percent of workers and 27 percent of retirees very confident) and least likely to feel confidence in the federal government (11 percent of workers and 8 percent of retirees) (Fig. 20, pg. 20).

Workers More Confident About Retirement, EBRI Says

2010-03-25T08:21:00.001-07:00

Bloomberg

Do you know how much to save for retirement?

2010-03-25T08:01:00.001-07:00

Washington Post

Will the bull market of the past year last?

2010-03-22T15:13:00.000-07:00

http://www.northjersey.com

Savings goal, not guesses, needed

2010-03-22T15:08:00.000-07:00

Savings goal, not guesses, needed

Perceptions of Retirement Preparation

2010-03-22T15:04:00.001-07:00

FOXBusiness

Fewer Americans saving for retirement, study finds

2010-03-19T08:58:00.001-07:00

The Star-Ledger - NJ.com

Markets rebound, but workers have little left for retirement

2010-03-19T08:56:00.001-07:00

associated press

Poll: Americans Unprepared for Retirement

2010-03-19T08:56:00.000-07:00

aol news

Employment worries are dragging the economy

2010-03-19T08:51:00.000-07:00

Employment worries are dragging the economy

Will the bull market of the past year last?

2010-03-19T08:46:00.000-07:00

BY GAIL MARKSJARVIS

NPR: Meager Savings Set Up Not-So Golden Years

2010-03-17T15:12:00.000-07:00

http://www.npr.org/templates/story/story.php?storyId=124775908

Retirement, what's that?

2010-03-15T07:44:00.001-07:00

Marketwatch

How to Make Your Company's Retirement Plan Work For You

2010-03-15T06:50:00.000-07:00

By JEAN CHATZKY

Investors remain leery | MailTribune.com

2010-03-15T05:13:00.001-07:00

Investors remain leery | MailTribune.com

A Harsh Retirement Reality Check - FOXBusiness.com

2010-03-15T05:09:00.001-07:00

A Harsh Retirement Reality Check - FOXBusiness.com

Podcast on 2010 Retirement Confidence Survey

2010-03-15T04:57:00.001-07:00

“TALKING” POINTS. This week Jack VanDerhei, Research Director,
Employee Benefit Research Institute (EBRI), discusses EBRI’s 2010
Retirement Confidence Survey. MORE at
http://newsmail.plansponsor.com/cgi-bin1/DM/y/eCu7d0WsThW0CBD0K3to0EL

Given Up Hope on Retirement?

2009-09-29T10:47:00.001-07:00

Given Up Hope on Retirement?
Newsweek

http://www.newsweek.com/id/215868&ct=ga&cd=sGppdOACJMU&usg=AFQjCNHR5nGtzlbxNw-FIOFz4YY-LkS6vw

September 2009 cover story for Plan Sponsor

2009-09-29T10:44:00.000-07:00

Indeed, some say typical income-replacement tools may underestimate people’s needs. The models do not fully account for such crucial factors as investment risk, longevity risk, and catastrophic health-care cost risk, VanDerhei says. “In a lot of cases, that 75% to 80% [replacement ratio] is way, way too low if you want even a 75% chance of having enough money,” he says. He developed the Ballpark E$timate Monte Carlo model for EBRI that aims to give people a sense of what income-replacement rate they need to have a 50%, 75%, and 90% chance of being able to cover their basic expenses in retirement. A single rule-of-thumb does not work, he and others say, given the variability in individuals’ situations. “A lot of models just use an average: average expected returns, average life expectancy,” he says. “If you think about it, they are saying, ‘This is how much you need to have a 50% chance of not running out of money.””

http://www.plansponsor.com/magazine_type3/?RECORD_ID=44531&page=1

An Evaluation of the Adequacy and Structure of Current U.S. Voluntary Retirement Plans, with Special Emphasis on 401(K) Plans

2009-09-29T10:33:00.000-07:00

Abstract:
This paper reviews the results of many empirical and simulation studies EBRI has undertaken to determine whether future cohorts of retirees in the US are likely to have retirement income adequacy and the extent to which the voluntary retirement system is contributing to this objective in its current form as well as possible modifications that may increase its efficiency.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1474865

The Declining Role of Private Defined Benefit Pension Plans: Who Is Affected, And How

2009-09-29T10:30:00.000-07:00

Excerpt: "Using an empirical distribution of enhanced contributions to DC plans from sponsors freezing their DB plans, we simulate the nominal annuity that could be purchased at retirement age from these enhanced contributions. We then back out the net pension loss experienced by employees in the future."

http://www.pensionresearchcouncil.org/publications/document.php?file=811

IRAs are more popular as other investments wane

2009-06-02T06:19:00.000-07:00

IRAs are more popular as other investments waneSt. Louis Post-Dispatch - St. Louis,MO,USA

The Role of Private Defined Benefit Pension Plans in US Retirement Income: Past, Present and Future Scenarios

2009-05-05T07:24:00.000-07:00

http://docs.google.com/Presentation?id=dcgsr3jt_532fdfhrn8j

Humberto Cruz: Savings Game The State Journal-Register

2009-04-22T01:58:00.001-07:00

Humberto Cruz: Savings Game

The State Journal-Register

401(k) plans under scrutiny after Americans lose $600 billion in ... Chicago Tribune

2009-04-22T01:56:00.001-07:00

401(k) plans under scrutiny after Americans lose $600 billion in ...

Chicago Tribune

Many aren't too confident they can retire in comfort The Star-Ledger

2009-04-20T05:21:00.000-07:00

Many aren't too confident they can retire in comfort

The Star-Ledger

The 2009 Retirement Confidence Survey: Economy Drives Confidence to Record Lows; Many Looking to Work Longer

2009-04-20T05:19:00.000-07:00

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1390072

Abstract:
This paper presents key findings from the 19th annual Retirement Confidence Survey (RCS), a survey that gauges the views and attitudes of working-age and retired Americans regarding retirement, their preparations for retirement, their confidence with regard to various aspects of retirement, and related issues. Workers who say they are very confident about having enough money for a comfortable retirement this year hit the lowest level in 2009 (13 percent) since the Retirement Confidence Survey started asking the question in 1993, continuing a two-year decline. Retirees also posted a new low in confidence about having a financially secure retirement, with only 20 percent now saying they are very confident (down from 41 percent in 2007). More workers are also planning to supplement their income in retirement by working for pay. The percentage of workers planning to work after they retire has increased to 72 percent in 2009 (up from 66 percent in 2007). This compares with 34 percent of retirees who report they actually worked for pay at some time during their retirement. Workers who say they are very confident in having enough money to take care of basic expenses in retirement dropped to 25 percent in 2009 (down from 40 percent in 2007), while only 13 percent feel very confident about having enough to pay for medical expenses (down from 20 percent in 2007). Among retirees, only a quarter (25 percent, down from 41 percent in 2007) feel very confident about covering their health expenses. Many workers still do not have a good idea of how much they need to save for retirement. Only 44 percent of workers report they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire - and an equal proportion (44 percent) simply guess at how much they will need for a comfortable retirement.

The 2009 Retirement Confidence Survey was conducted in January 2009 through 20-minute telephone interviews with 1,257 individuals (1,001 workers and 256 retirees) age 25 and older in the United States. The RCS was co-sponsored by the Employee Benefit Research Institute (EBRI), a private, nonprofit, nonpartisan public policy research organization; and Mathew Greenwald & Associates, Inc., a Washington, DC-based market research firm.

Keywords: Retirement attitudes and opinions, Retirement planning

Fewer People Believe They Have Enough Money Saved To Cover Medical ... Kaiser network.org

2009-04-15T15:17:00.001-07:00

Fewer People Believe They Have Enough Money Saved To Cover Medical ...

Kaiser network.org

Economy dampens hope of a comfortable retirement BusinessWeek

2009-04-15T05:01:00.002-07:00

Economy dampens hope of a comfortable retirement

BusinessWeek

Workers' hope of retiring with enough money plummets to new low Baltimore Sun

2009-04-15T05:01:00.001-07:00

Workers' hope of retiring with enough money plummets to new low

Baltimore Sun

Three Words To Fix Your Retirement Plan: Lower Your Standards FOXBusiness

2009-04-15T04:59:00.000-07:00

Three Words To Fix Your Retirement Plan: Lower Your Standards

FOXBusiness

New York Times: Economy Dampens Hope of a Comfortable Retirement

2009-04-15T04:35:00.000-07:00

http://www.nytimes.com/aponline/2009/04/14/business/AP-Retirement-Confidence.html?_r=1

Markets Maul Retirement Confidence Planadviser.com

2009-04-15T04:31:00.001-07:00

Markets Maul Retirement Confidence

Planadviser.com

Retirement Redefined: 'Keep Working' FOXBusiness

2009-04-15T04:30:00.002-07:00

Retirement Redefined: 'Keep Working'

FOXBusiness

Retirement Confidence at Record Low, Survey Says Washington Post

2009-04-15T04:30:00.001-07:00

Retirement Confidence at Record Low, Survey Says

Washington Post

Commentary: Raise retirement satisfaction by lowering your standards

2009-04-15T04:27:00.000-07:00

Commentary: Raise retirement satisfaction by lowering your standards

MarketWatch - ‎6 hours ago‎

Economy dampens hope of a comfortable retirement, Seattle Post-Intelligencer: Business

2009-04-14T14:28:00.002-07:00

Economy dampens hope of a comfortable retirement

Retirement Outlook Drops to Record Low (The Wall Street Journal)

2009-04-14T14:28:00.001-07:00

Retirement Outlook Drops to Record Low (The Wall Street Journal)

Americans Lose Confidence in Ability to Retire U.S. News & World Report

2009-04-14T14:27:00.000-07:00

Americans Lose Confidence in Ability to Retire

Chicago Sun-Times: Americans have little retirement confidence survey finds

2009-04-14T14:26:00.000-07:00

Americans have little retirement confidence survey finds

Your Company's Fund Is Bruised, but Don't Worry Washington Post, United States - Jan 10, 2009

2009-01-10T13:31:00.000-08:00

Your Company's Fund Is Bruised, but Don't Worry Washington Post, United States - Jan 10, 2009

Working Longer as Jobs Contract

2008-10-23T10:58:00.000-07:00

New York Times, Working Longer as Jobs Contract. (October 23, 2008).

New York Times, Working Longer as Jobs Contract

2008-10-22T11:23:00.000-07:00

http://www.nytimes.com/2008/10/23/business/retirement/23SQUEEZE.html?pagewanted=all

Social Security recipients to get a raise in 2009; Average retiree's check to go up by $63 a month

2008-10-17T04:31:00.000-07:00

USA TODAY, October 17, 2008 Friday, MONEY; Pg. 1B, 366 words, Christine Dugas and Sandra Block

EBRI 2008 Recent Retirees Survey: Report of Findings

2008-08-27T02:41:00.000-07:00

This paper presents findings from the 2008 Recent Retirees Survey, sponsored by the Employee Benefit Research Institute (EBRI) to better understand the tools and practices that might encourage workers to postpone their retirement and remain longer with their company. It finds that retirees typically retired from employers for one of four reasons: retirement becomes affordable, lack of job satisfaction, a desire for more personal or family time, and/or their own health status. One of the major findings from the survey is that employers have a narrow window of up to two years in which they may be able to intervene to change retiring workers' decisions by offering them incentives to remain with the company. Although no single incentive is likely to motivate a majority of retirees to stay longer with their employer, it appears that employers may be able to assemble a toolkit of alternatives that would be effective in retaining substantial numbers of workers at retirement age. The survey tested a total of 19 possible incentives that might encourage retiring workers to postpone retirement. The most likely incentives to be successful are: (1) feeling truly needed for an assignment; (2) allowing the worker to receive a full pension while working part time; (3) a pay increase; (4) continuing to receive company subsidized health insurance benefits at the same level as full-time workers while working part time; (5) allowing the worker to receive a partial pension while working part time so that total income remains the same; (6) being able to work seasonally or on a contract basis.

Helman, Ruth, Copeland, Craig, VanDerhei, Jack and Salisbury, Dallas L.,EBRI 2008 Recent Retirees Survey: Report of Findings(July 2008). EBRI Issue Brief, No. 319Available at SSRN: http://ssrn.com/abstract=1158071

Chasing down retirement

2008-08-12T08:10:00.001-07:00

http://www.chicagotribune.com/business/yourmoney/chi-ym-working-0727-cpjul27,0,2918337.column

Can Women Bridge the Retirement Savings Gap?

2008-08-12T06:43:00.000-07:00

http://www.businessweek.com/investor/content/aug2008/pi2008088_307392.htm?chan=top+news_top+news+index_investing

Economic Woes Force Many To Postpone Retirement

2008-08-03T10:10:00.000-07:00

NPR's All Things Considered

http://www.npr.org/templates/story/story.php?storyId=93241950

Goal for retirement saving rises

2008-07-09T02:55:00.000-07:00

http://www.usatoday.com/money/perfi/retirement/2008-06-30-retirement-pay-health-care_N.htm

The 2008 Retirement Confidence Survey ®: Americans Much More Worried About Retirement, Health Costs a Big Concern

2008-07-09T01:10:00.000-07:00

Abstract: This paper presents key findings from the 18th annual Retirement Confidence Survey® (RCS), a survey that gauges the views and attitudes of working-age and retired Americans regarding retirement, their preparations for retirement, their confidence with regard to various aspects of retirement, and related issues. The 18th wave of the RCS finds that Americans' confidence in their ability to afford a comfortable retirement has dropped to its lowest level in seven years, reflecting worries about health costs, the economy, and home values. Decreases in confidence occurred across all age groups and income levels but was particularly acute among younger workers and those with lower incomes. However, this decreased confidence does not appear to have affected the way most Americans plan and save for retirement. Moreover, the RCS finds that faulty assumptions still hinder a realistic assessment of the preparations needed to ensure a financially secure retirement. In addition, the survey found that about half of workers (47 percent) say they and/or their spouse have tried to calculate how much money they will need for a comfortable retirement, up considerably from the low point of 29 percent measured in 1996. As before, the 2008 survey finds that doing a retirement savings calculation is particularly effective at changing worker behavior: 44 percent who calculated a goal changed their retirement planning, and of those almost two-thirds (59 percent) started saving or investing more. The 2008 Retirement Confidence Survey® was conducted in January 2008 through 20-minute random telephone interviews with 1,322 individuals (1,057 workers and 265 retirees) age 25 and older in the United States. The RCS was co-sponsored by the Employee Benefit Research Institute (EBRI), a private, nonprofit, nonpartisan public policy research organization; and Mathew Greenwald & Associates, Inc., a Washington, DC-based market research firm.

Keywords: Retirement attitudes and opinions, Retirement planning

JEL Classifications: J26

Accepted Paper Series

Suggested Citation
Helman, Ruth, VanDerhei, Jack and Copeland, Craig, "The 2008 Retirement Confidence Survey ®: Americans Much More Worried About Retirement, Health Costs a Big Concern" . EBRI Issue Brief, No. 316, April 2008 Available at SSRN: http://ssrn.com/abstract=1123642

The Impact of PPA on Retirement Savings for 401(K) Participants

2008-07-09T01:07:00.000-07:00

Abstract: This paper simulates (under several assumptions) the likely impact of 401(k) plan sponsors switching from voluntary enrollment systems to automatic enrollment designs with automatic escalation of contributions for a significant portion of workers (not just current 401(k) participants or those eligible to participate). This analysis indicates that even under the most conservative assumptions for auto-escalation of contributions, switching 401(k) plans to auto-enrollment is likely to have a very significant positive impact in generating additional retirement savings for many workers, especially for low-income workers. When results are aggregated across all income categories, the increase in the value of 401(k) accumulations at age 65 as a multiple of final earnings for those currently ages 25-29 would be approximately 2.4 to 2.6 times final salary by switching from voluntary enrollment to automatic enrollment. Although the aggregate results favor automatic enrollment, distributional analysis of the differences between the two systems indicates that the higher paid are not likely to benefit as much from such a change. The median 401(k) accumulations for the lowest-income quartile of these workers (assuming all 401(k) plans were voluntary enrollment) would only be 0.1 times final earnings at age 65 (this is largely due to the fact that 41 percent of workers - as opposed to participants - were assumed to have zero balances at age 65). However, if all 401(k) plans are assumed to be using the auto-enrollment provisions under PPA, the median 401(k) accumulations for the lowest-income quartile jumps to 2.5 times final earnings under the most conservative assumptions and 4.5 times final earnings under the most beneficial assumptions. Even for the top 25 percent of these workers (when ranked by 401(k) accumulations as a multiple of final earnings), there are large increases: the multiple under a voluntary enrollment scenario is 1.8 times final earnings, whereas auto-enrollment provides multiples ranging from 6.5 to 10.4, depending on auto-escalation of contributions. Comparing income replacement targets generated in previous EBRI work with these simulated 401(k) accumulations shows that, even with the large increases that can be expected for many workers under the safe harbor auto-enrollment plans introduced by PPA, and with current-law Social Security benefits, additional resources will still be needed for some of them.

Keywords: Employment-based benefits, Pension plan coverage, Pension plan design, Retirement income, Savings

JEL Classifications: J26, J33

Accepted Paper Series

Suggested Citation
VanDerhei, Jack and Copeland, Craig, "The Impact of PPA on Retirement Savings for 401(K) Participants" . EBRI Issue Brief No. 318 Available at SSRN: http://ssrn.com/abstract=1152392

Savings Needed to Fund Health Insurance and Health Care Expenses in Retirement: Findings from a Simulation Model

2008-07-09T01:05:00.000-07:00

Abstract: This paper provides estimates for savings needed to cover health insurance to supplement Medicare and out-of-pocket expenses for health care services in retirement. It finds that a male age 65 in 2008 and retiring at age 65 will need anywhere from $64,000 to $159,000 in savings to cover health insurance premiums and out-of-pocket expenses in retirement if they are comfortable with a 50 percent chance of having enough money and $196,000 to $331,000 if they prefer a 90 percent chance. Women age 65 retiring in 2008 will need anywhere from $86,000 to $184,000 in savings to cover health insurance premiums and out-of-pocket expenses in retirement if they are comfortable with a 50 percent chance of having enough money, and $223,000 to $390,000 if they prefer a 90 percent chance. Persons currently age 55 will need even greater savings when they turn 65 in 2018. Past EBRI research has examined how much money an individual needs for health care expenses in retirement, focusing on how savings varies by length of life and health care cost increases. Past research was based on computer modeling that used deterministic (non-random) analytical techniques. The research presented in this paper builds on that earlier work by introducing random (stochastic) computer modeling to more realistically examine the uncertainty of longevity and investment risk as well as future health care cost increases. This paper begins with a brief discussion of the modeling technique, followed by main findings and updated data on trends in retiree health benefits.

Keywords: Employment-based benefits, Health care costs, Health insurance, Medicare, Medicare supplement insurance, Prescription drug costs, Public employees, Retiree health benefits, Savings, State and local employees

JEL Classifications: H51, I1, J14, J32

Accepted Paper Series

Suggested Citation
Fronstin, Paul , Salisbury, Dallas L. and VanDerhei, Jack, "Savings Needed to Fund Health Insurance and Health Care Expenses in Retirement: Findings from a Simulation Model" (May 2008). EBRI Issue Brief, No. 317, May 2008 Available at SSRN: http://ssrn.com/abstract=1139175

Goal for retirement saving rises; Conventional wisdom changes as prices surge

2008-07-01T04:40:00.000-07:00

USA TODAY, July 1, 2008 Tuesday, MONEY; Pg. 1B, 427 words, Christine Dugas

http://www.usatoday.com/money/perfi/retirement/2008-06-30-retirement-pay-health-care_N.htm

The 2008 Retirement Confidence Survey ®: Americans Much More Worried About Retirement, Health Costs a Big Concern

2008-04-21T10:42:00.000-07:00

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1123642

This paper presents key findings from the 18th annual Retirement Confidence Survey® (RCS), a survey that gauges the views and attitudes of working-age and retired Americans regarding retirement, their preparations for retirement, their confidence with regard to various aspects of retirement, and related issues. The 18th wave of the RCS finds that Americans' confidence in their ability to afford a comfortable retirement has dropped to its lowest level in seven years, reflecting worries about health costs, the economy, and home values. Decreases in confidence occurred across all age groups and income levels but was particularly acute among younger workers and those with lower incomes. However, this decreased confidence does not appear to have affected the way most Americans plan and save for retirement. Moreover, the RCS finds that faulty assumptions still hinder a realistic assessment of the preparations needed to ensure a financially secure retirement. In addition, the survey found that about half of workers (47 percent) say they and/or their spouse have tried to calculate how much money they will need for a comfortable retirement, up considerably from the low point of 29 percent measured in 1996. As before, the 2008 survey finds that doing a retirement savings calculation is particularly effective at changing worker behavior: 44 percent who calculated a goal changed their retirement planning, and of those almost two-thirds (59 percent) started saving or investing more.

Retirement Confidence Survey articles

2008-04-13T10:47:00.000-07:00

HEALTH CARE, ECONOMY HAVE MANY WORRIED ABOUT THEIR RETIREMENTS

San Jose Mercury News (SJ) - WEDNESDAY, April 09, 2008

GOLDEN RETIREMENT DREAMS TURN A FOGGY GRAY

St. Paul Pioneer Press (ST) - SUNDAY, April 13, 2008

By: Gail MarksJarvis

WELCOME TO A TIME OF PESSIMISM ON RETIREMENT IN AMERICA

Sun, The (Baltimore, MD) (BS) - SUNDAY April 13, 2008

By: Gail MarksJarvis

DREAMS ABOUT RETIRING WITHER

St. Petersburg Times (PE) - WEDNESDAY, April 09, 2008

By: HELEN HUNTLEY

WORKERS WORRY OVER RETIREMENT SAVINGS

Capital Times, - WEDNESDAY, April 09, 2008

By: EILEEN ALT POWELL Associated Press

New York Times, An Alternative to Annuities for Retirees Seeking Income,. (November 22, 2007).

2007-11-22T10:59:00.000-08:00

New York Times, An Alternative to Annuities for Retirees Seeking Income,. (November 22, 2007).

New York Times, Save Yourself

2006-04-11T11:30:00.000-07:00

http://www.nytimes.com/2006/04/11/business/retirement/11savings.html?pagewanted=all

New York Times, Few workers saving enough to retire on

2006-04-07T11:20:00.000-07:00

http://www.nytimes.com/2006/04/07/your-money/07iht-mbrf1.html

New York Times, When Your Pension Is Frozen

2006-01-22T11:19:00.000-08:00

http://query.nytimes.com/gst/fullpage.html?res=9C06EFD6123FF931A15752C0A9609C8B63

New York Times, More Companies Ending Promises For Retirement

2006-01-09T11:15:00.000-08:00

http://query.nytimes.com/gst/fullpage.html?res=9C02E5D91F30F93AA35752C0A9609C8B63&sec=&spon=&pagewanted=3

New York Times, On Their Own, in the Same Boat

2004-04-13T11:36:00.000-07:00

http://www.nytimes.com/2004/04/13/business/retirement/13SING.html

New York Times, Do You Want Your Money All at Once or Bit by Bit Forever?

2003-03-18T11:34:00.000-08:00

http://www.nytimes.com/2003/03/18/jobs/decisions-do-you-want-your-money-all-at-once-or-bit-by-bit-forever.html?pagewanted=2

When your salary stalls (BusinessWeek)

2002-07-19T07:56:00.000-07:00

http://www.usatoday.com/money/perfi/retirement/bw/2002-07-18-salary.htm

New York Times, Pension Change Puts the Burden On the Worker

2002-04-05T11:29:00.000-08:00

http://www.nytimes.com/2002/04/05/business/pension-change-puts-the-burden-on-the-worker.html?pagewanted=all

New York Times, Socking It Away Amid Red Tape

2002-03-12T11:36:00.000-08:00

http://www.nytimes.com/2002/03/12/jobs/saving-socking-it-away-amid-red-tape.html?pagewanted=all

Sweetening Pensions at a Cost to Workers,

2002-02-17T10:57:00.000-08:00

By DAVID LEONHARDT, New York Times, February
17, 2002. ().

NPR's All Things Considered

2002-01-30T10:03:00.000-08:00

In last night's State of the Union address, President Bush called for greater security in retirement. To learn about some of the changes that could be made to give people more options to save, Liane Hansen talks with Jack VanDerhei , a Research Fellow at the Employee Benefits Research Institute, a non-partisan, non-profit research group. He's also an Employee Benefits Professor at Temple University in Philadelphia.

http://www.npr.org/templates/story/story.php?storyId=1137236

Social Security Reform: Evaluating Current Proposals

1999-06-01T06:14:00.000-07:00

http://www.ebri.org/pdf/briefspdf/0699ib.pdf

The present Social Security program has been shown to be financially unsustainable in the future without modification to the current program. The purpose of this Issue Brief, EBRI's fourth in a series on Social Security reform, is threefold: to illustrate new features of SSASIM not available in earlier EBRI publications, to expand quantitative analysis to specific proposals, and to evaluate the uncertainty involved in proposals that rely on equity investment.
This analysis compares the Gregg/Breaux-Kolbe/Stenholm (GB-KS) and Moynihan/Kerrey proposals with three generic or “traditional” reforms: increasing taxes, reducing benefits, and/or increasing the retirement age. Both proposals would create individual accounts by “carving out” funds from current Social Security payroll taxes.
This analysis also examines other proposed changes that would “add on” to existing Social Security funds through the use of general revenue transfers and/or investment in the equities market. President Clinton has proposed a general revenue transfer and the collective investment of some of the OASDI trust fund assets in equities. Reps. Archer and Shaw have proposed a general revenue tax credit to establish individual accounts that would be invested partially in the equities markets.
When comparing Social Security reform proposals that would specifically alter benefit levels, the Moynihan/Kerrey bill compares quite favorably with the other proposals in both benefit levels and payback ratios, when individuals elect to use the individual account option. In contrast, the GB-KS bills do not compare quite as favorably for their benefit levels, but do compare favorably in terms of payback ratios.
An important comparison in these bills is the administrative costs of managing the individual accounts, since benefits can be lowered by up to 23 percent when going from the assumed low to high administrative costs. Moreover, allowing individuals to decide whether to save the 2 percent of their OASDI taxable income or to receive higher take-home pay, as would be allowed in Moynihan/Kerrey, could lead to substantial differences in ultimate retirement income.
Allowing for individual investment choices and using actual 401(k) participant allocation data, as opposed to an assumed average allocation for everyone, results in substantial differences in account balances. The Archer/Shaw approach mandates a 60 percent/40 percent equity/bond split specifically to avoid the variations in returns that arise from individual investment allocation decisions.
Although there are greater chances for higher returns for equity investment in the president's proposal, there are also greater chances for worse outcomes. This is also true for other reforms that would invest Social Security assets in equities.

How Do Individual Social Security Accounts Stack Up?

1998-03-01T06:12:00.000-08:00

http://www.ebri.org/pdf/briefspdf/0398ib.pdf

As the Social Security debate heats up, the unprecedented quantitative analysis available through SSASIM will provide policymakers and the public with information necessary for making informed policy decisions. In fact, this type of model was specifically suggested for use in the recommendations regarding research and data in the Report of the 1994-96 Social Security Advisory Council (Social Security Advisory Council, 1997).
This report shows cost, benefit, national saving, and growth projections under five options for reforming the Old-Age and Survivors Insurance (OASI) program. Of these, two are partially privatized ("two-tiered") options with individual account contributions equal to 5 percent of taxable payroll. One option is modeled under the assumption that, on average, participants invest individual Social Security account balances in a "life-cycle" mix of equities and Treasury bonds, while the other option is modeled assuming 100 percent Treasury bond investment. In addition to the two-tiered options, the report presents projections for three traditional reforms that would bring the current system into financial balance: the first would exclusively raise taxes; the second would raise taxes as well as the normal retirement age (NRA); and the third would reduce benefits only.
A man and woman of the 1976 birth cohort are modeled because they are part of a cohort whose members would pay transition costs over their entire working lives under the generic two-tiered options modeled in this report. (Transition costs are likely to be spread across a time period at least this long under actual reform proposals.) A man and woman of the 2026 birth cohort are modeled because they are scheduled to pay no transition costs. Thus, results are illustrative of a "worst case scenario" in terms of potential transition burdens for the 1976 cohort and a best case scenario for the 2026 cohort.
Results indicate that one traditional reform that would cut future Social Security costs is increasing the NRA to age 67 more quickly than under current law and indexing it to longevity thereafter. This reform would allow payroll taxes to be scheduled 9 percent lower after 2025 than those under a system that only increases taxes to fund current-law benefits. By 2070, cost rates under a reform that raises the normal retirement age like this would be 13.4 percent lower than those associated with funding benefit projections under the current system.
Two highly controversial assumptions have been made in order to model the nontraditional, two-tiered options in this EBRI Issue Brief. First, this analysis assumes that a system of individual accounts is administratively feasible. In addition, individual account balances are assumed to be preserved for retirement, contrary to the results of legislative activity of recent years that has expanded the potential for nonretirement use of savings in individual retirement accounts (IRAs) and employment-based pensions. If any individual account balances were available for preretirement withdrawals, the benefit projections reported for the two-tiered options in this report would be overestimates. Finally, individual Social Security account balances are assumed to be converted into indexed life annuities at retirement, allowing direct comparison of projected benefits under a partially privatized reform with those of the current system.
Like the reform that raises the NRA, both two-tiered options would reduce future Social Security costs, but not until the transition costs to a partially privatized system are paid. In the two-tiered reforms modeled here, these costs are projected to equal 5 percent of taxable payroll over 40 years. Until the transition costs are fully paid, the two-tiered options are projected to require 18 percent higher average tax/contribution rates than a reform that raises taxes to maintain the current system.
To reduce costs over 75 years relative to funding the current system, the traditional defined benefit portion of the Old-Age and Survivors Insurance (OASI) program would be scaled back 70 percent by 2040 under the assumptions used in this study. Largely as a result, annual real average benefits under a two-tiered system, even where a portion of account balances are assumed to be invested in equities, are lower for "average" women of the 1976 birth cohort and "average" men and women of the 2026 birth cohort relative to raising taxes only. Average women of both cohorts could expect to receive between 15 percent and 20 percent lower annual real average benefits under the Two-Tiered Option with Life-Cycle Investment than under a funded current system.
Average women of both cohorts, like the working poor, are projected to receive lower annual real benefits under both two-tiered options than under a funded current system in part because these groups tend to benefit most from the redistributive nature of the current Social Security program.
Largely because of transition costs paid from 2000-2040, payback ratios for persons born in 1976 are higher under a reform that funds the current system than under the Two-Tiered Option with Life-Cycle Investment. In contrast, because the 2026 cohort is projected to enter the work force after transition costs have been paid, this cohort is projected to receive significantly higher payback ratios under the Two-Tiered System with Life-Cycle Investment than under a financially balanced current system.
Although 2026 cohort members pay no transition costs to lower their payback ratios under the Two-Tiered, All Bond Investment option, they also would not get high enough returns on their investments to offset the attendant reduction in traditional OASI benefits. The implication is that while the two-tiered options do not provide higher payback ratios than Raising Taxes Only for the 1976 cohort because of the transition costs scheduled in this analysis, the prospect of higher payback ratios for the 2026 cohort, which pays no transition costs, exists only if the beneficiary invests to some extent in equities.
In terms of payback ratios and annual real benefits, the results obtained in this analysis indicate that women born in 1976 would be better off under a reform that raises taxes enough to bring the current system into balance or a system that also raises the NRA than under either of the two-tiered options. In terms of final average earnings projections, an average woman born in 1976 is projected to receive $2,042 more in preretirement earnings under the two-tiered approach that assumes life-cycle investment in equities. However, she is also likely to receive 10.4 percent less in average lifetime earnings plus net benefits under this option than under a reform that increases taxes enough to fund the current system.
The two-tiered options involve more market risk than the traditional Social Security reform. At the 95th percentiles, benefits under the Two-Tiered Option with Life-Cycle Investment could be much larger than benefits under the more traditional reforms. However, at the 5th percentiles, benefits under the Two-Tiered Option with Life-Cycle Investment could be nearly as low as those under a system that reduces benefits only to bring the program into balance. Results suggest that from a perspective of policymakers who are more risk averse, adjusted real annual average benefits under the Two-Tiered Option with Life-Cycle Investment are lower than those under more traditional reforms.
For some groups, such as the 2026 birth cohort, there may be a tradeoff between higher real average annual benefits under more traditional reforms and higher payback ratios under a two-tiered system, especially when benefits and payback ratios are adjusted for the higher levels of market risk inherent in a two-tiered system. Given the assumptions used in this study, risk-adjusted annual benefits are definitively higher under more traditional reforms such as Raising Taxes Only or Raising Taxes and the NRA, while risk-adjusted payback ratios are generally larger under a two-tiered system for the 2026 cohort even at higher levels of risk aversion.
National saving is projected to be approximately 4 percentage points higher by 2040 under the Two-Tiered Option with Life-Cycle Investment than under the more traditional reforms. One explanation is the partially prefunded nature of the two-tiered system. Plus, the additional contributions made to this system through transition taxes also increase national saving, as does the assumption that a portion of prefunded benefits will be invested in equities through life-cycle investing patterns. Theoretically, however, a defined benefit system could also be designed with taxes and policy parameters that would achieve the same level of national saving.
As a result of an increase in saving under the two-tiered system modeled in this report, real per capita gross domestic product is projected to be $3,600 higher by 2070 than under more traditional reforms. In addition, men born in 1976 are projected to receive about $3,950 more in preretirement earnings under a two-tiered system than under the more traditional reforms, and their female counterparts are projected to receive about $2,000 more.
Under the Two-Tiered Option with Life-Cycle Investment, an average man born in 1976 is projected to receive 7.8 percentage points less in average earnings plus net benefits, and his female counterpart is projected to receive 10.4 percentage points less. However, for the 2026 cohort, highest lifetime average earnings plus net benefits is projected under the Two-Tiered Option with Life-Cycle Investment. The average man of this cohort is projected to receive 1.3 percentage points more in average earnings plus net benefits under the Two-Tiered Option with Life-Cycle Investment than under Raising Taxes Only, whereas the average woman born in 2026 is projected to receive 1.6 percentage points less.

A Framework for Analyzing and Comparing Social Security Policies

1997-03-01T06:08:00.000-08:00

http://www.ebri.org/pdf/briefspdf/0397ib.pdf
This Issue Brief provides a framework for evaluating and comparing Social Security policies by delineating 11 broad areas of consideration and highlighting some of the relevant questions within these areas. This framework is not a comprehensive list of all considerations but is intended to provide a feel for their complexity and to highlight some of their most popularly recognized interactive possibilities. As the first report to be delivered in the course of EBRI's Social Security Reform Analysis Project, this Issue Brief sets the theoretical framework in which to place the forthcoming technical results.
Sound outcome comparison and analysis defies cursory examination and is a multifaceted process. The interplay between complex beliefs and values involved is testimony to the potential shortcomings of any proposed "easy answers"e; to the resolution of Social Security's finance issues. As this framework shows, in fair and comprehensive comparison and analysis, every Social Security policy reform, as well as the current system, must be held accountable to a number of hard questions.
There are three broad areas to consider in comparing Social Security policies. The first is identification of the policies' underlying philosophies and assumptions that affect policy goals. Second, the nuts-and-bolts structure of each policy must be ascertained. Knowing the specific parameters of a plan provides a starting point for predicting programmatic outcomes, the third broad area of consideration.
Here is where "the basics" end and complexity begins. For the purposes of Social Security debate, there are 11 broad policy outcome considerations: (1) adequacy, (2) equity, (3) monetary costs, (4) other economic effects, (5) effects on the rest of the U.S. retirement system, (6) governmental effects, (7) administrative effects, (8) political effects, (9) social effects (or, nonmonetary cost considerations), (10) protection against uncertainties, and, finally, (11) the determination of the best policy by weighing each of the aforementioned considerations.
These outcomes must be identified in terms of three key aspects: each outcome's effect on all demographic groups potentially affected, potential short-term and long-term interactions among outcomes, and the rationale behind each outcome prediction. The four points of consideration for outcome prediction rationale are: assumptions used, validity of assumptions, sensitivity of outcomes to assumptions, and robustness of these assumptions over time.
Finally, differing ideas about the appropriate goals of Social Security policy emerge from varying underlying assumptions about political, economic, and other human behaviors. In addition, policy advocates differ in their assumptions about demographics and their views of desirable public policy goals, including beliefs about the appropriate delegation of responsibility between government and workers in providing retirement income security.

New York Times, Special Tax Breaks Enrich Savings Of Many in the Ranks of Management

1996-10-13T11:42:00.000-07:00

http://www.nytimes.com/1996/10/13/business/special-tax-breaks-enrich-savings-of-many-in-the-ranks-of-management.html?pagewanted=all