Defined contribution plans – often known as 401k plans – have become the mainstay of US company pensions, yet their main function has been to get employees to save and invest during their work years. These plans haven’t been successful at delivering lifetime income benefits, as a rule: fewer than one-fifth of all such plans today help workers convert their plan assets into retirement paychecks.…Read More
RetireSecure Blog
The Pension Research Council’s curated blog features insights from the industry’s leading professionals.
Views of our Guest Bloggers are theirs alone, and not of the Pension Research Council, the Wharton School, or the University of Pennsylvania.
Financially Frail Boomer Women
Baby Boomer women – now in their 50’s and 60’s – are doing worse financially than older women in the 1990s. My new research with Professor Annamaria Lusardi explains why, using national representative survey data from the Health and Retirement Study and the National Financial Capability Study. We track changes in older women’s work plans and debt burdens, along with the links to financial literacy and debt stressors.…Read More
Making Your Retirement Savings Last
Ask yourself these questions:
Do you want a guaranteed retirement income stream as long as you live, to protect you against outliving your assets?
Are you nearing retirement?
Are you in a defined contribution pension – either an employer-sponsored 401(k) or 403(b) plan, or an individual Roth or regular IRA?
If the answer to any of these questions is “yes,” reading this post could save you money!…Read More
A Proposal For Allowing State Pension Buyouts
Many U.S. state and local employee pensions are facing dire problems as massive plan liabilities come due, threatening to drain government coffers. As Robert Novy-Marx and Joshua Rauh wrote in the Journal of Finance, 21 state pensions held less than 40 percent of the assets needed to pay benefits. Their estimate of the aggregate “funding gap” faced by states was roughly $2.5 trillion in 2009. Since then, the story has not improved, and it has likely worsened. Puerto Rico recently joined Detroit as a case study of fiscal and public pension mismanagement and failure, and the Puerto Rican pension is essentially without any assets.…Read More
Why Aren’t Consumers Doing Their Part?
Interest rates are nothing more than the cost of spending money today instead of saving it. And a main tool of monetary policy has always been controlling interest rates as a means of stimulating or cooling off economic activity. When central bankers lower interest rates, they encourage people to spend more today. This is because lowering the return on saving encourages firms to hire and invest to meet the increased demand and boosts economic activity.…Read More
A Peek Into America’s Pocketbook Reveals Finances Are Improving Slowly, But Surely
Today’s release of the latest National Financial Capability Study shows that we’re doing better protecting ourselves against financial emergencies than in the past. We’re also doing a better job cutting our high-interest debt than previously. Yet our personal finances, particularly the amount of debt we’re taking on, is still troubling.…Read More
Retirement Income Calculators: Not Much Better Than Counting On Your Fingers?
When average Americans confront the complicated problem of how much to save for retirement, they often use so-called “rules of thumb,” or greatly-simplified approaches, to figure out how much to save and how to invest. It turns out that many of the computer programs created to help with retirement income planning do exactly the same thing: use rules of thumb.…Read More
Here’s How to Get More People to Delay Claiming Social Security
By: Olivia S. Mitchell Olivia S. Mitchell (@OS_Mitchell) is a professor of business economics/policy and insurance/risk management at the Wharton School of the University of Pennsylvania, where she focuses on pensions, household finance, retirement, and risk management. Global aging paired with pension shortfalls have led many governments to raise retirement…Read More
Pemex’s Pension Problem: Why the Oil Giant Is on Slippery Ground
For some insight into the current condition of pensions in Latin American oil companies, check out this article on the Knowledge@Wharton website.
Is Social Security Really Running Short?
Social Security is a pay-as-you-go system, since payroll taxes collected from today’s workers mostly go to pay today’s retirees. But as the U.S. population ages, fewer young workers are paying into the system relative to rising numbers of ever-longer-lived retirees drawing benefits, according to this opinion piece by Olivia S. Mitchell, a Wharton professor of business economics and public policy, and also insurance and risk management.…Read More