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Medicaid and the Elderly

July 31, 2014 Comments off

Medicaid and the Elderly
Source: Center for Retirement Research at Boston College

The brief’s key findings are:

  • Medicaid covers not only the low-income elderly but also those with higher incomes who become impoverished by health costs, such as nursing home care.
  • The percentage of high-income single retirees receiving Medicaid rises with age – from near zero for those in their 70s to 20 percent for those in their late 90s.
  • Even higher-income retirees who never receive Medicaid benefit from the insurance value that it provides, which allows them to maintain smaller reserves.
  • The analysis suggests that single retirees of all incomes value current Medicaid benefits at more than their cost but an expansion at less than its cost.
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Social Security’s Financial Outlook: The 2014 Update in Perspective

July 30, 2014 Comments off

Social Security’s Financial Outlook: The 2014 Update in Perspective
Source: Center for Retirement Research at Boston College

The brief’s key findings are:

The 2014 Trustees Report shows little change from last year:

  • Social Security’s 75-year deficit rose modestly to 2.88 percent of payroll.
  • But the deficit as a percent of GDP is still 1 percent.
  • And trust fund exhaustion is still 2033, after which payroll taxes still cover about three quarters of promised benefits.

The shortfall is manageable but, with the deficit rising to about 4 percent in two decades, action should be taken soon to avoid larger tax/benefit changes later.

And the disability insurance program needs immediate attention, as its trust fund is expected to be exhausted in 2016.

Retirement — How Much Should People Save?

July 29, 2014 Comments off

How Much Should People Save?
Source: Center for Retirement Research at Boston College

The brief’s key findings are:

  • The National Retirement Risk Index framework is used to address how much working-age households need to save for retirement.
  • A typical household should get a third of its retirement income from a savings plan, with the low income needing one quarter and the high income one half.
  • A typical household needs to save about 15 percent of earnings, with the low income requiring less and the high income more.
  • For those with a savings shortfall, the necessary savings hike is much more feasible for younger households than for older households.
  • Starting to save early and retiring late dramatically reduce a household’s required saving rate.

The Funding of State and Local Pensions: 2013-2017

June 12, 2014 Comments off

The Funding of State and Local Pensions: 2013-2017
Source: Center for Retirement Research at Boston College

The brief’s key findings are:

  • Despite a strong stock market, the funded status of public plans in 2013 remained unchanged at 72 percent for two reasons:
  • actuarially smoothed assets grew modestly;
  • andCalPERS, one of the nation’s largest plans, significantly revised its reported funded ratio.
  • An encouraging sign is that sponsors appear to be paying a larger share of their annual required contribution.
  • Going forward, the funded ratio is projected to gradually move above 80 percent, assuming historical stock market returns.

The U.K.’s Ambitious New Retirement Savings Initiative

April 15, 2014 Comments off

The U.K.’s Ambitious New Retirement Savings Initiative
Source: Center for Retirement Research at Boston College

The brief’s key findings are:

  • The United Kingdom is rolling out a low-cost retirement system for workers who lack pension coverage.
  • The new system has three core elements:
    • Employers auto-enroll their workers at a 4-percent contribution rate, matched by the employer and government combined.
    • A new non-profit provides the infrastructure to keep costs low.
    • The plans’ target date funds start young workers with low-risk investments to avoid losses that could discourage saving.
  • The U.S.’s new “myRA” program includes two similar design features – low-risk investments and government infrastructure – but it lacks auto-enrollment.

Lower-Income Individuals Without Pensions: Who Misses Out and Why?

April 9, 2014 Comments off

Lower-Income Individuals Without Pensions: Who Misses Out and Why?
Source: Center for Retirement Research at Boston College

In 2010, only 19 percent of individuals ages 50-58 whose household incomes were less than 300 percent of the poverty line participated in a pension of any kind at their current jobs, compared to 56 percent of those above 300 percent of poverty. This paper investigates this pension gap. In particular, we decompose the pension participation rate into its four elements in order to compare coverage between higher- and lower-income individuals: 1) the fraction of people who are currently working (the employment rate); 2) the fraction of workers who are in firms that offer pension benefits to at least some workers (the offer rate); 3) the fraction of workers who are eligible for pension benefits, conditional on being in a firm where it is offered (the eligibility rate); and 4) the fraction of workers who enroll in a pension plan when they are eligible (the take-up rate). We find that the substantial pension gap between higher- and lower-income individuals is driven primarily by the lower-income group’s lower employment rate and the smaller probability of working for an employer that offers pensions; when lower-income workers do have a pension plan at work, their eligibility and take-up rates are nearly equivalent to higher-income workers. We also find that the factors associated with a higher value for each element of pension participation are very consistent: higher education and income, previous pension history, and job characteristics including firm size, occupation, job tenure, and union status. Together, these findings suggest that policies such as automatic enrollment that focus on pension eligibility or take-up are unlikely to close the pension coverage gap between older, lower-income individuals and their higher-income contemporaries; instead, greater pension participation requires more jobs and, in particular, more “good jobs.”

Is Pension Coverage a Problem in the Private Sector?

April 3, 2014 Comments off

Is Pension Coverage a Problem in the Private Sector?
Source: Center for Retirement Research at Boston College

The brief’s key findings are:

  • Commentators question whether pension coverage is a serious problem, indicating that 80 percent have access to a plan.
  • But this number refers to access – not participation – and to full-time workers in both the public and private sectors.
  • A review of four household surveys and one employer survey finds that only about half of all private workers (age 25-64) are participating in a plan.
  • So, yes, coverage remains a serious problem.
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