Ameriprise Survey Shows Retirement Savings Derailed by More Than Just the Recession; Financial Impacts are Measurable
Countless studies have shown that many Baby Boomers don’t believe they have enough savings to live comfortably in retirement, but why are so many financially unprepared? Data from the Retirement DerailersSM survey, released today by Ameriprise Financial (NYSE: AMP), helps answer the questions many have about the retirement crisis in America.
The Retirement DerailersSM survey found that the vast majority (90%) of Americans ages 50-70 with $100,000 or more in investable and retirement assets have experienced at least one “derailer” – an economic or life event that has made an impact on their retirement savings goals. The average respondent experienced four of these events, which range from derailers that are beyond their control such as the effects of the recession, to family and lifestyle choices that have lasting financial consequences. In the end, these events set respondents back $117,000 on average. In fact, nearly two in five of the respondents (37%) experienced five or more unanticipated events costing them approximately $144,000.
Unexpected expenses come in all shapes and sizes both before and during retirement, but there are a few that rose to the top. The top three most cited derailers are, not surprisingly, related to the recession. Nearly two-thirds (63%) of respondents say low interest rates impacted the growth of their investments. More than half (55%) say their savings were significantly lowered due to market declines and one-third (33%) admit their home equity is now not going to help fund retirement as much as they expected.
Still, many respondents experienced life events that derailed their retirement. One in four (23%) are supporting a grown child or grandchild and just as many (23%) say their pension plan is not worth as much as they’d thought or has been discontinued. What’s more, one in five respondents’ retirement goals have been thrown off track due to making bad investments (22%), taking social security before retirement age (19%) and/or experiencing a job loss (18%).
While it appears that Boomers have found a way to “make it work” in the short-term as they weather these unexpected derailers, they may not have the ability to be as resilient after they leave the workforce. Only 33 percent of respondents say they are extremely or very confident they would be able to afford an unexpected expense such as large home repairs in retirement.
Source: U.S. Postal Service
As a prelude to National Dog Bite Prevention Week, the Postal Service released its dog attack city rankings today and urged pet owners to help reduce the incidence of dog bites to letter carriers.
“If our letter carriers deem your loose dog to be a threat, you’ll be asked to pick up your mail at the Post Office until it’s safe to deliver,” said Ken Snavely, acting postmaster of Los Angeles, where 69 postal employees were attacked last year, placing the City of Angels as the most vicious for dog attacks. Nationwide, 5,879 postal employees were attacked.
Snavely noted that in situations where a dog roams the neighborhood, delivery to the owner’s neighbors could be curtailed as well. Additionally, when letter carriers come to a customer’s door, pet owners are asked to place dogs in a separate room and close the door, as many canines have been known to jump through screen and glass doors.
Dog attacks are a nationwide issue and not just a postal problem. Nearly 5,900 letter carriers were attacked last year, but that pales in comparison to the 4.7 million Americans annually bitten by dogs — more than half of whom are children — according to the Centers for Disease Control and Prevention (CDC). The U.S. Postal Service, the medical community, veterinarians and the insurance industry are working together to educate the public that dog bites are avoidable by declaring May 19-25 as National Dog Bite Prevention Week.
Source: U.S. Department of Defense
Following Defense Secretary Chuck Hagel’s announcement yesterday that most Defense Department civilian employees will experience up to 11 furlough days from early July through September, senior defense officials emphasized their goal to reduce adverse effects on the workforce and the mission.
Speaking to Pentagon reporters on background, two senior defense officials discussed details of the furlough, exemptions and stressed their intent to lessen its effects.
One official said it appears that about 15 percent — 120,000 of the department’s roughly 800,000 civilian employees — will be exempt from the furlough, and that number could rise once issues involving intelligence personnel are resolved.
While the furloughs will save the Defense Department $1.8 billion, “it’s not something that we wanted to do,” the official said.
Part of the department’s plan to reduce the furlough’s effects is to ask Congress allow shifting funds from one account to another, the official said.
The services previously had taken steps in an attempt to avoid furlough, the official noted, with the Air Force stopping flights for 12 combat-coded squadrons and the Army canceling most of its combat training rotations.
While all the services will experience furloughs, the official said, the Navy is getting a critical exemption for its civilian employees that work in shipyards and do nuclear maintenance, citing long periods required for maintenance and very little ability to catch up with maintenance on submarines and carriers.
The official acknowledged furloughs will reduce efficiency across the department.
+ Furlough memorandum (PDF)
Guestworkers in the high-skill U.S. labor market: An analysis of supply, employment, and wage trends
Source: Economic Policy Institute
This paper reviews and analyzes the science, technology, engineering, and mathematics (STEM) labor market and workforce and the supply of high-skill temporary foreign workers, who serve as “guestworkers.” It addresses three central issues in the ongoing discussion about the need for high-skill guestworkers in the United States:
- Is there a problem producing enough STEM-educated students at sufficient performance levels to supply the labor market?
- How large is the flow of guestworkers into the STEM workforce and into the information technology (IT) workforce in particular? And what are the characteristics of these workers?
- What are the dynamics of the STEM labor market, and what are the employment and wage trends in the IT labor market?
Analysis of these issues provides the basis for assessing the extent of demand for STEM workers and the impact of guestworker flows on the STEM and IT workforces.
In a Divorce or Dissolution Who Gets the Pension Rights: Domestic Relations Law and Retirement Plans
Source: Pepperdine Law Review
When a marriage begins, it is made in heaven and will last "forever." However, when a marriage is legally over there is the rough sundering of dreams and hopes for the future and the need to sort out amongst the former life companions what is legally the property of each. This article will explore the evolving legal process which divides the property rights acquired during marriage in a retirement plan which was, intended to act as a shield against deprivation of the marriage partners in their mutually shared old age.
“Swept Away” — Abuses against Sex Workers in China
Source: Human Rights Watch
This 51-page report documents abuses by the police against female sex workers in Beijing, including torture, beatings, physical assaults, arbitrary detentions, and fines, as well as a failure to investigate crimes against sex workers by clients, bosses, and state agents. The report also documents abuses by public health agencies, such as coercive HIV testing, privacy infringements, and mistreatment by health officials.
Source: Center for Retirement Research at Boston College
The brief’s key findings are:
- State and local government employment dropped sharply during the Great Recession, unlike in previous recessions, and continues to decline even today.
- But this decline in public sector employment was less severe than that experienced by the private sector.
- Being a state/local worker reduced the probability of job loss by 2 percentage points, after controlling for education and other characteristics.
- While this relative job security is an attractive aspect of state/local employment, it is not enough to tip the balance of total compensation in favor of public workers.
Source: Chronicle of Higher Education
From article: 4 Public-College Presidents Pass $1-Million Mark in Pay
Public higher education’s million-dollar club just got bigger. Four public-college presidents earned more than $1-million in 2011-12, up from three a year earlier, a Chronicle analysis has found. The median total compensation for public-college leaders rose to $441,392, an increase of 4.7 percent from 2010-11.
The top earner was Graham B. Spanier, who received $2.9-million. Mr. Spanier, who was fired in 2011 in connection with a child-sex-abuse scandal involving a former assistant football coach, received most of his money in severance pay and deferred compensation, which is money he earned during his 16-year presidency that was not previously paid out.
The Chronicle’s analysis included 212 college leaders at 191 public institutions.
New GAO Reports and Testimonies
Source: Government Accountability Office
1. Bureau of the Public Debt: Areas for Improvement in Information Systems Controls. GAO-13-416R, May 9.
2. Federal Reserve Banks: Areas for Improvement in Information Systems Controls. GAO-13-419R, May 9.
3. Preliminary Results of Work on FAA Facility Conditions and Workplace Safety. GAO-13-509R, May 9.
1. Transportation Worker Identification Credential: Card Reader Pilot Results Are Unreliable; Security Benefits Should Be Reassessed, by Stephen M. Lord, director, homeland security and justice, before the Subcommittee on Government Operations, House Committee on Oversight and Government Reform. GAO-13-610T, May 9.
2. Federal Retirement Processing: OPM Is Pursuing Incremental Information Technology Improvements after Canceling a Modernization Plagued by Management Weaknesses, by Valerie C. Melvin, director, information management and technology resource issues. GAO-13-580T, May 9.
Highlights – http://www.gao.gov/assets/660/654450.pdf
3. Missile Defense: Opportunity to Refocus on Strengthening Acquisition Management, by Cristina T. Chaplain, director, acquisition and sourcing management, before the Subcommittee on Strategic Forces, Senate Committee on Armed Services. GAO-13-604T, May 9.
Highlights – http://www.gao.gov/assets/660/654457.pdf
Every day, Americans benefit from public structures that contribute to our quality of life. When we walk into a clean, well-maintained post office; drive on federal highways; send our kids to school knowing they’ll get a hot lunch; or call the Social Security benefits office with a question, we see our federal tax dollars at work, providing public services we rely on.
What most Americans don’t know is that many of the workers keeping our nation humming are paid low wages, earning barely enough to afford essentials like food, health care, utilities and rent. Through federal contracts and other funding, our tax dollars are fueling the low-wage economy and exacerbating inequality. Hundreds of billions of dollars in federal contracts, grants, loans, concession agreements and property leases go to private companies that pay low wages, provide few benefits, and offer employees little opportunity to work their way into the middle class. At the same time, many of these companies are providing their executives with exorbitant compensation.
We find that nearly two million private sector employees working on behalf of America earn wages too low to support a family, making $12 or less per hour. This is more than the number of low-wage workers at Walmart and McDonalds combined.1 Yet, if anything, this figure underestimates the total number of poorly-paid workers funded by our tax dollars. Our analysis encompasses U.S. workers employed by government contractors, paid by federal health care spending, supported by Small Business Administration loans, working on federal construction grants, and maintaining buildings leased by the federal government. This encompasses the largest share of poorly-paid workers funded by our taxes. However, other streams of funding have yet to be analyzed. For example, loans and subsidies from the Department of Agriculture fund giant agribusinesses that employ more than a million farm workers, while grants from the Department of Education fund low-wage assistant teachers, bus monitors and cooks in Head Start and other programs. Due to lack of data, retail and food service workers for concessionaires of the National Parks Service and other federal agencies also fall outside our analysis.
These are employees working on behalf of America, doing jobs that we have decided are worthy of public funding—yet they’re being treated in a very un-American way. Our nation has a history of ensuring our tax dollars provide decent jobs. From the 1931 Davis-Bacon Act to Executive Order 11246 of 1965, and a host of other laws and executive actions, our laws have mandated that companies working on behalf of the American people are upholding high standards of employment practices. Yet as the nature and prevalence of federal contracting, lending and grant-making have changed, and some laws have been weakened, working people have fallen through the cracks.
Quality Employment for Women in the Green Economy: Industry, Occupation, and State-by-State Job Estimates
Source: Institute for Women’s Policy Research
This report provides the first-ever estimates of women’s employment in the green economy, state-by-state, by industry, and by occupation. The analysis draws on the U.S. Census Bureau’s American Community Survey; the Brookings-Battelle Clean Economy database; and the U.S. Department of Labor, Bureau of Labor Statistics Green Goods and Services survey. The report examines women’s share of employment in the occupations predicted to see the highest growth in the green economy and includes two alternative state-by-state estimates for growth in green jobs. Focusing on investments in green buildings and retrofits, the report includes a state-by-state analysis of employment in key construction occupations by age, race, ethnicity, and gender. This report was funded by a grant from the Rockefeller Foundation’s Sustainable Employment in a Green US Economy (SEGUE) Program. It is the first of a series of publications investigating strategies for improving women’s access to quality employment in the green economy; future reports will address good practices in workforce development for women in the green economy.
Source: Good Jobs First
As business climatology’s sponsorship has diversified, so have its practitioners. However, its core methodological tricks have remained the same: Choose public policies that are of high concern to the corporate and/or high-wealth sponsors (e.g., unemployment insurance rates then or the estate tax today). Use self-interested respondents and/or anecdotes to ascribe otherwise unverifiable or even improbable weights to the variables. Choose variables that reduce inequality (e.g., state minimum wages) and down-rate them, in the name of jobs, of course. Or choose variables that are self-fulfilling because they are outcomes, not causes (e.g., using high-speed broadband access as a predictor rather than an indicator of growth). Or cherry-pick small, incomplete sample sets to suggest positive or negative correlations.
A recurring proof of the flawed methodologies is their lack of predictive value. It used to be Grant Thornton allowing 50 state manufacturing lobbyists to each weight their own “business climate” variables, obviously an unscientific data pollutant. Today, the same kind of idiosyncratic issues surface, as when the American Legislative Exchange Council (ALEC) inveighs against Tennessee’s estate tax. In our 2012 study focusing specifically on Rich States, Poor States: The ALECLaffer Economic Competitiveness Index, we actually found small negative correlations between some of ALEC’s favored policies and positive economic outcomes (and no statistically significant positive relationships).
Indeed, the underlying frame of these studies—that there is such a thing as a state “business climate” that can be measured and rated—is nonsensical. The needs of different businesses and facilities vary far too widely. Besides, states are not the meaningful unit of competition in economic development: metro areas are, and conditions can vary more among metro areas within a state than they do between states. Young tech start-ups need lots of engineers and venture capital. Server farms and mini-mills need cheap electricity. Warehouses need proximity to interstate highways. Headquarters need access to finance, marketing and industry-specific talent pools. Given these realities, “business climate” studies must be viewed for what they actually are: attempts by corporate sponsors to justify their demands for lower taxes and to gain public-sector help suppressing wages.
Source: Research Papers in Economics
Using a panel study of annual NFL data (2000–2008) we test for exit discrimination on career length in the NFL. We focus on six positional groups: defensive backs, defensive linemen, linebackers, running backs, tight ends and wide receivers. We test for exit discrimination using both parametric and semi-parametric hazard models. In our analysis, in addition to race, we include performance variables to determine their importance in determining career length. Our analysis posits the question: Do team owners in the pursuit of championships keep talented players regardless of their race?
Source: University of Warwick
From press release:
Government policies that boost the amount of home ownership in a country are likely to inflict severe damage on the labour market, new research from the University of Warwick suggests.
Professor Andrew Oswald from the University of Warwick and Professor David (“Danny”) Blanchflower from Dartmouth College examine a century of unemployment and home-ownership data for the states of the USA from 1900 to 2010. Combining those numbers with modern data on millions of randomly sampled Americans, the researchers show there is a powerful link between the housing market and the later health of the economy.
Rises in home-ownership in a US state are followed by substantial increases in the unemployment rate in the state, a fall in the mobility of its workers, a rise in commuting times, and a drop in the rate of new business formation. The authors are careful to check, and they replicate, their findings for different periods of US history. The release of their work coincides with a new European study, done independently, which draws the same conclusions. That research, by Jani-Petri Laamanen at the University of Tampere, follows the effects of housing market deregulation across the regions of Finland.
Professor Oswald said: “We have been collecting data for decades now and it is appropriate to go public on the results. We find that a high rate of home-ownership slowly decimates the labour market. The USA makes a valuable ‘laboratory’ in which to study this issue, because the different states have a language, currency, and culture in common.”
The Warwick research is agnostic about some of the underlying mechanisms, but the authors believe that high home ownership in an area leads to people staying put and commuting further and further to jobs, thereby creating cost and congestion for firms and other workers; to NIMBY (not in my back yard) activities where home owners block new businesses; and to an ossification of the mobility and dynamism of an economy. The authors’ argument is not that an owner is disproportionately likely to lose his or her job.
The authors believe their ideas apply equally well to Europe. Countries like Spain and Greece famously have high home-ownership (80%+) and high unemployment (20%+), while nations like Switzerland, Germany and Austria are notably low on both.
“Characteristics of the Population With Consumer-Driven and High-Deductible Health Plans, 2005–2012,” and “Retirement Plan Participation and Asset Allocation, 2010”
Source: Employee Benefit Research Institute
Characteristics of the Population With Consumer-Driven and High-Deductible Health Plans, 2005–2012
- Generally, the population of adults within both high-deductible (HDHP) and traditional health plans have been split 50–50 between men and women. In contrast, differences in gender have been found between consumer-driven health plan (CDHP) enrollees and those with traditional coverage.
- In most years, CDHP enrollees were less likely than those with traditional coverage to be between the ages of 21 and 34, and the CDHP population was more likely than traditional-plan enrollees to be in households with $150,000 or more in income in every year except 2009 and 2010.
- CDHP enrollees were roughly twice as likely as individuals with traditional coverage to have college or post-graduate educations in nearly all years of the survey.
- CDHP enrollees have consistently reported better health status than traditional-plan enrollees, exhibiting better health behavior than traditional-plan enrollees with respect to smoking and (except for 2010 and 2011), exercise, and sometimes obesity rates.
Retirement Plan Participation and Asset Allocation, 2010
- The likelihood of a working family head participating in a retirement plan increased with the size of his or her employer. In 2010, among family heads working for employers with 10–19 employees, 22.4 percent participated in a plan, compared with 67.2 percent of family heads who worked for employers with 500 or more employees.
- In 2010, 18.9 percent of family heads who participated in an employment-based retirement plan had a defined benefit (DB) plan only, while 65.0 percent had a defined contribution (DC) plan only, and the remaining 16.1 percent had both a DB and a DC plan. This was a significant change from 1992, when 42.3 percent had a DB plan only, and 40.8 percent had a DC plan only.
- Asset allocation within a family head’s retirement plan seems to be affected by his or her ownership of other types of retirement plans. Those who own an IRA are more likely to be invested all in stocks if they also own a 401(k)-type of plan. Those who own a DB plan and a 401(k)-type plan are less likely to allocate their DC plan to all interest-earning assets.
Source: National Center on Education and the Economy
Today NCEE released What Does It Really Mean to Be College and Work Ready?, a study of the English Literacy and Mathematics required for success in the first year of community college. During a day-long meeting with key education and policy leaders, NCEE will discuss the results of the study and its implications for community college reform, school reform, teacher education, the common core state standards, and vocational education and the workplace.