Category Archives: Retirement

The investment industry threatens state plans to help workers save – States wrestle with impending retirement crisis as pensions disappear

Source: Jared Bennett, Center for Public Integrity, April 2, 2018

…..Since 2015, Oregon and four other states ­­— California, Illinois, Connecticut and Maryland — have set up these so-called “auto-IRA” programs overseen by the state. Nine more states are considering similar programs this year, among them New York, Missouri and Pennsylvania.

But the investment industry is standing in the way, aggressively deploying trade groups and raising the specter of legal threats to stop the proliferation of these plans. Behemoths such as the National Association of Insurance and Financial Advisors and the U.S. Chamber of Commerce oppose the plans because they argue the private sector already provides options for workers like Kono. But many small businesses, such as Annastasia Salon, find the private plans too expensive.

The industry’s lobbying efforts look to be winning, as proposed state-run retirement plans are languishing in statehouses around the country…..

2017 Workplace Benefits Report

Source: Bank of America Merrill Lynch, ARKRNPFQ, 2017

From the summary:
Bank of America Merrill Lynch works with employers across the country to help provide employee education, guidance and retirement plan solutions that help employees take charge of their financial lives. As part of this ongoing effort, we conduct an annual study — the Workplace Benefits Report (WBR) — to talk to employers and employees about retirement readiness and larger financial wellness topics. Our current report examines how employees feel about their financial situation and the role employers play in supporting their overall financial wellness.

On behalf of Bank of America Merrill Lynch, Boston Research Technologies conducted an online survey with a national sample of 1,242 employees between September 22, 2016 to October 7, 2016. Understanding the ever-evolving retirement landscape, monitoring and keeping abreast of these key indicators and opinions, helps us empower employers to stay ahead of the curve while helping meet the varied needs of their employees.

Related:
/2017_WBRInfographic_R6_060217.pdf”>Infographic Presentation
Millennials Supplement
Healthcare Supplement

The perk your employer is most likely to give you, and it’s not a raise
Source: Maria Lamagna, Marketwatch, March 27, 2018

The Retirement Outlook for Millennials: What Is the Early Prognosis?

Source: Richard W. Johnson, Karen E. Smith, Damir Cosic, Claire Xiaozhi Wang, Urban Institute, March 27, 2018

From the abstract:
Social, economic, demographic, and public policy shifts have made Gen Xer and millennial retirement security a pressing concern. In this report, we combine data from multiple sources to project how various forces might play out over the next 30 years to shape the retirement security of late Gen Xers (born in the last half of the 1970s) and early millennials (born in the first half of the 1980s).

U.S. tax law fuels changes to employee benefit and compensation programs

Source: Willis Towers Watson, February 21, 2018

Willis Towers Watson’s recent pulse survey on impacts from the new tax law reveals that the most common changes organizations have made or are planning or considering include expanding personal financial planning, increasing 401(k) contributions, and increasing or accelerating pension plan contributions. Other potential changes include increasing the employer health care subsidy, reducing or holding flat the employee payroll deduction, or adding a new paid family leave program in accordance with the Family Medical and Leave Act’s tax credit available for paid leave for certain employees.

Related:
Press Release

Millennials’ Retirement Saving Behavior: Account Ownership and Balance

Source: Rui Yao, Guopeng Cheng, Family and Consumer Sciences Research Journal, Volume 46 Issue 2, December 2017
(subscription required)

From the abstract:
Among the generations, the Millennials are the largest group in the United States. Compared with their parents and grandparents, the Millennials need to assume more responsibility to prepare financially for retirement. Few studies have analyzed this generation’s retirement saving behavior. Using data from the 2013 Survey of Consumer Finances, this study examined the state of Millennials’ retirement savings, including retirement account ownership and balance. Results showed that only 37.2% of Millennials had any account designated for retirement. Among those with a retirement account, the average accumulated amount was $21,333. Factors that affected retirement saving behavior included age, education, total household income and assets, job tenure, self-employment, having a retirement saving motive, having a defined benefit plan, overspending, and risk tolerance. This study provided insight that can help financial planners and educators, as well as policymakers, understand the Millennials’ current retirement savings behavior. Also, the results can help the Millennials engage in saving for their retirement.

Related:
Awfully few millennials have retirement accounts
Source: Sheena Rice, Futurity, March 6, 2018

Millennials and Retirement: Already Falling Short

Source: Jennifer Erin Brown, National Institute on Retirement Security (NIRS), February 2018

From the summary:
A new report finds a deeply troubling retirement outlook for the Millennial generation. Most Millennials have nothing saved for retirement, and those who are saving aren’t saving nearly enough. The report indicates that many factors are contributing to this generation’s retirement savings challenges – from depressed wages to the lack of eligibility to participate in employer retirement plans.

More specifically, the analysis finds that 66 percent of working Millennials have nothing saved for retirement, and the situation is far worse for working Millennial Latinos. Some 83 percent of Latinos in this generation have nothing saved for retirement.

Related:
Press release

Supreme Court: Union Retiree Health Benefits Weren’t Vested for Life

Source: Allen Smith, SHRM, February 22, 2018

Draft language in CBAs and benefits documents thoughtfully.

Retiree health care benefits end when a collective bargaining agreement (CBA) between a company and a union expires, unless the CBA provides otherwise, the Supreme Court ruled Feb. 20. The decision underscores the importance of giving careful thought to all language proposed and agreed to at the bargaining table, said David Pryzbylski, an attorney with Barnes & Thornburg in Indianapolis. Make sure the language in the CBA clearly expresses the parties’ intent, he stated. Benefits documents should as well, labor relations attorneys say. ….

The Attack on Workers’ Retirement

Source: Dean Baker, Labor Notes, January 12, 2018

While many current retirees are reasonably comfortable because they have pensions, the future does not look bright for those yet to retire.

Traditional defined-benefit pensions are rapidly disappearing in the private sector—less than 15 percent of workers have them. Most public sector workers still have them—more than 20 million are either now receiving or looking forward to a pension. However, public sector pensions are coming under attack from the American Legislative Exchange Council (ALEC) and other right-wing groups.

Over the last four decades employers have been anxious to convert the traditional defined-benefit pensions into defined-contribution 401(k) plans.

The difference is that with a defined benefit, the worker is secure while the employer does not know exactly how much it will have to pay in. Workers are guaranteed a lifetime benefit based on their salary and years of service; the employer’s bill depends on the worker’s longevity and on stock market performance.

With a defined-contribution plan, the employer knows just how much it will pay each year, and the worker shoulders all the uncertainty. This means that workers face the risk that the market will plunge just after they retire—and they may quite possibly outlive their savings.

By getting rid of defined-benefit plans, employers are transferring risk to workers. In addition, they often contribute less to a defined-contribution plan than to the defined-benefit plans they replaced, in effect cutting workers’ pay. ….