August 2019
03Aug

Falling Short: The Coming Retirement Crisis and What to Do About It

By Charles D. Ellis, Alicia H. Munnell, Andrew D. Eschtruth  The United States faces a serious retirement challenge. Many of today's workers will lack the resources to retire at traditional ages and maintain their standard of living in retirement. Solving the problem is a major challenge in today's environment in which risk and responsibility have shifted from government and employers to individuals. For this reason, Charles D. Ellis, Alicia H. Munnell, and Andrew D. Eschtruth have written this concise guide for...

August 3, 2019
Adequacy, Books, Savings, System Sustainability, , , ,
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03Aug

The False Promise of Portman-Cardin Pension Reform

By Michael Doran This article analyzes the pension-reform bill introduced in 2019 by Senator Portman and Senator Cardin. Earlier Portman-Cardin bills, enacted in 1996, 2001, and 2006, substantially increased the amounts that higher-income families can save in tax-qualified retirement plans and IRAs, but they included only modest and mostly ineffective measures to encourage retirement savings by lower- and middle-income families. Despite the tens of billions of dollars in tax subsidies spent under the earlier Portman-Cardin legislation, retirement-account values today...

August 3, 2019
Articles, Regulation, Savings, , ,
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03Aug

Multiemployer plans: evaluating a proposal to spread the pain

By Alicia Munnell, Jean- Pierre Aubry, Wenliang, Hou, Anthony Webb The Multiemployer Pension Reform Act (MPRA) allows multiemployer plans facing insolvency to apply for approval from the Treasury to cut accrued benefits of plan members to prolong plan solvency—a departure from the benefit protections of Employee Retirement Income Security Act. To assess the law's impact, this paper models Central States Teamsters – by far the largest – plan to have applied under the new law to reduce benefits. Using...

August 3, 2019
Articles, Labor Market, Pension design, Savings, , ,
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July 2019

19Jul

Longevity: a new asset class

By David Blake A little over a decade ago, a new asset classemerged, one linked to longe vity risk, i.e., unanticipatedchanges in life expectancy. The Life Market has two seg-ments: a macro-segment with assets linked to groups of lives,such as members of a pension plan or a book of annuitants;and a micro-segment with assets linked to individual lives,such as life settlements. For the market to become global,certain market requirements need to be satisfied, such asunderstanding the causal factors underlying...

July 19, 2019
Articles, Investing, Pension design, Savings,
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19Jul

Selecting a Social Security Age to Balance Consumption and Risk

By Barry Cobb, Jeffrey Smith This paper uses Monte Carlo simulation to determine the maximum consumption given retirement at age 62, initial wealth, risk tolerance, and Social Security take decision. Coile et al. (2002) argue for a delay, because the payment increases 7% for each year. Focusing on maximizing the expected present value of benefits may be misguided. This paper shows that, conditional on retirement at age 62, initial consumption is always maximized by taking Social Security no later...

July 19, 2019
Aging, Articles, Savings, ,
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Navigating Complex Financial Decisions at Retirement: Evidence from Annuity Choices in Public Sector Pensions

By Robert L. Clark, Robert G. Hammond, David Vanderweide Choices regarding the disposition of wealth at retirement can have substantial implications for retirement income security. We analyze the factors determining annuity option choices offered by a public sector defined pension plan with no default annuity option. Using combined administrative records and survey data, we explore the role of individual and household characteristics as well as risk preferences, time preferences, and financial literacy. The evidence is consistent with predictions over which...

July 19, 2019
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12Jul

The Future of Finance is Now: The Most Important Trends in Finance for the Coming Decade Have Already Started

By Jason Schenker The Future of Finance is Already HereIndustries are being disrupted by new and emerging technologies. The coming decade will bring an acceleration of technological innovation, adoption, and disruption. But finance has long been an industry at the forefront of technology adoption, which is why some of the most critical technological innovations and solutions for finance have already emerged. The Future of Finance is Now explores the most important innovations in finance technology (FinTech) as...

July 12, 2019
Books, Investing, Pension Management, Savings, , ,
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June 2019

21Jun

Annuity Pricing in Public Pension Plans: Importance of Interest Rates

By Nino Abashidze, Robert L. Clark, Beth Ritter, David Vanderweide There is little systematic information on the distribution options in public sector retirement plans and how annuity options are priced relative to the standard single life annuity. This study examines the distribution options of 85 large public retirement plans covering general state employees, teachers, and local government employees. An important component of the analysis is the construction of a data set presenting the annuity options offered by each of...

June 21, 2019
Adequacy, Aging, Articles, Savings, ,
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07Jun

How Will Retirement Saving Change By 2050? Prospects for the Millennial Generation

By William G. Gale, Hilary Gelfond, Jason J. Fichtner We consider prospects for retirement saving for members of the millennial generation, who will be between ages 54 and 69 in 2050. Adequacy of retirement saving preparation among current and near-retirees is marked by significant heterogeneity, a characteristic that will likely hold for Millennials as well. In preparing for retirement, Millennials will have several advantages relative to previous generations, such as more education, longer working lives, and more flexible work arrangements,...

June 7, 2019
Aging, Articles, Labor Market, Savings, ,
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May 2019

31May

Ensuring Retirement Security with Simple GLIDeS

By Adam Kobor, Arun Muralidhar There is a growing retirement crisis and most of the focus has been on the fact that individuals are not saving enough for retirement, may not have access to pension schemes, or are financially illiterate. More critically, assets/financial products available to investors, may not be appropriate for the typical individual saving for retirement. The goal of retirement is to try to guarantee a target level of income ideally from retirement till death. Current glide...

May 31, 2019
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