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Americans’ Views of the Retirement Crisis

April 28, 2015 Comments off

Americans’ Views of the Retirement Crisis
Source: National Institute on Retirement Security

A new nationwide public opinion research report finds that an overwhelming majority of Americans – 86 percent – believe the nation faces a retirement crisis.

This biennial nationwide public opinion research is the fourth poll that measures how Americans feel about their financial security in retirement and assesses their views on policies that could improve their retirement outlook. It is intended to serve as a tool for policymakers, thought leaders and retirement service providers as they work to stem the retirement crisis and re-fortify the U.S. retirement infrastructure.

Boomer Expectations for Retirement 2015 — Fifth Annual Update on the Retirement Preparedness of the Boomer Generation

April 22, 2015 Comments off

Boomer Expectations for Retirement 2015 — Fifth Annual Update on the Retirement Preparedness of the Boomer Generation (PDF)
Source: Insured Retirement Institute

Each year the Insured Retirement Institute (IRI) conducts a survey to measure the retirement preparedness of the Boomer generation. This report, the fifth in the series, summarizes the results of the 2015 survey and analyzes key changes over the past five years.

As Baby Boomers age, and as more members of the cohort are either in or very near retirement, the survey responses are changing. For an increasing number of Boomers, especially those that have not taken steps to plan effectively, retirement reality is not aligning with retirement expectations.

Overall satisfaction fell considerably in this year’s study, following a significant decline last year. However, respondents who have taken steps to prepare for retirement, such as working with financial advisors, calculating retirement goals, purchasing retirement income products such as annuities, and developing retirement plans report much higher levels of overall economic satisfaction and retirement preparedness. As we’ll see in the detailed study results, Boomers who have prepared, and have realistic expectations, for retirement are much more likely to report overall satisfaction, confidence in their retirement readiness, and progress toward a secure retirement.

How Will Longer Lifespans Affect State and Local Pension Funding?

April 17, 2015 Comments off

How Will Longer Lifespans Affect State and Local Pension Funding?
Source: Center for State & Local Government Excellence

Americans are living longer – and that creates new funding challenges for state and local pension plans. Private sector plans are already required to utilize new mortality tables which account for increased longevity when formulating their cost estimates. A new issue brief from the Center for State and Local Government Excellence, How Will Longer Lifespans Affect State and Local Pension Funding?, examines the impact that incorporating longevity improvements into their costs estimates would have on the funded status of state and local defined benefit plans.

The brief explores explores what public plan liabilities and funded ratios would look like under two alternative scenarios:

  • if public plans were required to use the new mortality tables designed for private sector plans; and
  • if public plans were required to go one step further and fully incorporate expected future mortality improvements.

Key findings include:

  • Using the private sector standard, public plans underestimate life expectancy by only 0.5 years, reducing the 2013 funded status of state and local plans from 73 to 72 percent.
  • Incorporating future mortality improvements would increase life expectancy by 2.3 years and reduce the funded ratio of public plans from 73 to 67 percent.
  • Public sector plans appear to be making a serious effort to keep their life expectancy assumptions up to date.

SEC Staff and FINRA Issue Report on National Senior Investor Initiative

April 17, 2015 Comments off

SEC Staff and FINRA Issue Report on National Senior Investor Initiative
Source: U.S. Securities and Exchange Commission and Financial Industry Regulatory Authority

With the Social Security Administration estimating that each day for the next 15 years, an average of 10,000 Americans will turn 65, the staff of the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) today issued a report to help broker-dealers assess, craft, or refine their policies and procedures for investors as they prepare for and enter into retirement.

The National Senior Investor Initiative report includes observations and practices identified in examinations that focused on how firms conduct business with senior investors. The examinations by the SEC’s Office of Compliance Inspections and Examinations (OCIE) and FINRA focused on the types of securities purchased by senior investors, the suitability of recommended investments, training of brokerage firm representatives, marketing, communications, use of designations such as “senior specialist,” account documentation, disclosures, customer complaints, and supervision.

CA — Are Female Baby Boomers Ready for Retirement?

March 27, 2015 Comments off

Are Female Baby Boomers Ready for Retirement?
Source: University of Waterloo

Due to their life-course socio-economic conditions, many female boomers may suffer large decreases in well-being as they head into retirement. Pension reforms which increase retirement age will disproportionately disadvantage those already in low income. While changes to the CPP will reduce losses from poor or sporadic labour force participation, these changes are too late to help the early boomer women. Likewise, while research suggests that improving retirement outcomes must begin with improved labour market conditions, inequitable conditions persist. Therefore, any current policy change will miss helping the early boomers. Finally, with increasing rates of chronic disease and longer lifespans, policy must aim toward health and wellness promotion, providing a wider range of integrated care options, and clear estimates of added costs so that Canadians can adequately prepare for retirement.

Do Tax Incentives Increase 401(k) Retirement Saving? Evidence from the Adoption of Catch-Up Contributions

March 19, 2015 Comments off

Do Tax Incentives Increase 401(k) Retirement Saving? Evidence from the Adoption of Catch-Up Contributions
Source: Center for Retirement Research at Boston College

The U.S. government subsidizes retirement saving through 401(k) plans with $61.4 billion in tax expenditures annually, but the question of whether these tax incentives are effective in increasing saving remains unanswered. Using longitudinal U.S. Social Security Administration data on tax-deferred earnings linked to the Survey of Income and Program Participation, the project examines whether the “catch-up provision,” which was enacted in 2001 and allows workers over age 50 to contribute more to their 401(k) plans, has been effective in increasing earnings deferrals. Compared with similar workers under age 50, the study finds that contributions increased by $540 more among age-50-plus individuals who had approached the 401(k) tax-deferral limits prior to turning 50, suggesting that the older individuals respond to the expanded tax incentives. For this group, the elasticity of retirement savings to the tax incentive is quite high: a one-dollar increase in the tax-deferred limit leads to an immediate 49-cent increase in 401(k) contributions.

Are Retirees Falling Short? Reconciling the Conflicting Evidence

March 18, 2015 Comments off

Are Retirees Falling Short? Reconciling the Conflicting Evidence
Source: Center for Retirement Research at Boston College
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The brief‘s key findings are:

  • Federal Reserve data show that retirement preparedness has been declining over time, but studies on the level of preparedness offer conflicting assessments.
  • The National Retirement Risk Index (NRRI) finds half of households are “at risk,” while studies of optimal savings suggest less than one-tenth will fall short.
  • The optimal savings results depend crucially on two assumptions:  households spend less when their kids leave home (the NRRI assumes no decline); and households plan for declining consumption in retirement (the NRRI assumes steady consumption).
  • While the issue remains unsettled, the Federal Reserve data are consistent with the NRRI finding that retirement shortfalls are a growing problem.
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