Category Archives: Retirement

Looming Retiree Health-Care Costs? Let the Feds Help.

Source: Liz Farmer, Governing, March 12, 2014

As retiree health care costs soar, state and local governments would be wise to shift more of the burden to the federal government as they try to get a handle on their growing liabilities. An analysis by Moody’s Investors Service notes that growing health care liabilities pose an increasing credit risk for many municipal governments. States alone listed a total of more than $530 billion in unfunded “other post-retirement benefits” (OPEB) liabilities in 2012, Moody’s reports.

Aging America

Source: Al Jazeera America, America Tonight, 2014

With our senior population booming, America Tonight examines the problems and possibilities in the way we provide care. …

The silent army
Twenty-nine million Americans, or nine percent of the entire population, care for someone over the age of 74. Michael Okwu spends time with three women who have had to disrupt or suspend their lives to tend to an older loved one. From moving in with aging parents to putting a resistant father in a home, their stories offer glimpses of the decisions and strains born across the country by a largely invisible army.

The labor of care
As America’s elderly population balloons, so does the population of elder-care workers. Primarily women of color, these workers labor in isolation for meager pay and with few legal protections. We profile one woman, an immigrant from Barbados, who has been a domestic worker since she was 14. She details the enormous work of providing care, the frustrations of being unable to go to a movie, or even buy food, because of her salary, and the long, hard battle to get respect.

Seniors helping seniors
There is one group of Americans with the time on their hands to care for seniors in need: Younger, retired seniors. Christof Putzel follows Larry Davis, one representative of the growing seniors-helping-seniors movement, who fetches firewood for the elderly in his New Hampshire town, helps them winterize their homes and shovels their stoops. He wants to help them stay in their homes a little while longer, and hopes that when he needs it, someone might do the same for him.

For those who can’t find or afford human care for older loved ones, technology may end up filling the gap. Adam May visits some early adopters of elder-tech, from a group of siblings who check-in on their elderly mother with a telepresence robot, to homes wired up with sensors on cabinets, doorways and beds to allow for 24-hour monitoring. These technologies give hope for many families, but also force them to wrestle with the boundary between safety and privacy. …

Retirement Security in an Aging Society

Source: James M. Poterba, National Bureau of Economic Research (NBER), NBER Working Paper No. w19930, February 2014
(subscription required)

From the abstract:
The share of the U.S. population over the age of 65 was 8.1 percent in 1950, 12.4 percent in 2000, and is projected to reach 20.9 percent by 2050. The percent over 85 is projected to more than double from current levels, reaching 4.2 percent by mid-century. The aging of the U.S. population makes issues of retirement security increasingly important. Elderly individuals exhibit wide disparities in their sources of income. For those in the bottom half of the income distribution, Social Security is the most important source of support; program changes would directly affect their well-being. Income from private pensions, assets, and earnings are relatively more important for higher-income elderly individuals, who have more diverse income sources. The trend from private sector defined benefit to defined contribution pension plans has shifted a greater share of the responsibility for retirement security to individuals, and made that security more dependent on choices they make. A significant subset of the population is unlikely to be able to sustain their standard of living in retirement without higher pre-retirement saving.

Financial Security Scorecard: A State-by-State Analysis of Economic Pressures Facing Future Retirees

Source: Christian E. Weller, Nari Rhee, and Carolyn Arcand, National Institute on Retirement Security, March 2014

From the summary:
The Financial Security Scorecard: A State-by-State Analysis of Economic Pressures Facing Future Retirees finds states fall short in key areas measuring retirement readiness. …

This new analysis gauges the relative performance of the fifty states and the District of Columbia in three key areas: anticipated retirement income; major retirement costs like housing and healthcare; and labor market conditions for older workers.

The study is designed to serve as a tool for policymakers to help identify potential areas of focus for state-based policy interventions to improve Americans’ retirement prospects. …
See also:
press release
conference agenda

Global Pensions Asset Study 2014

Source: Towers Watson, January 2014

From the abstract:
This is a study of the 13 largest pension markets in the world and accounts for more than 85% of global pension assets. The countries included are Australia, Canada, Brazil, France, Germany, Hong Kong, Ireland, Japan, Netherlands, South Africa, Switzerland, the UK and the US. The study also analyses seven countries in greater depth by excluding the six smallest markets (Brazil, France, Germany, Ireland, Hong Kong and South Africa).

The analysis includes:
• Asset size, including growth statistics, comparison of asset size with GDP and liabilities
• Asset allocation
• Defined benefit and defined contribution share of pension assets
• Public and private sector share of pension assets.

The Role of Social Security, Defined Benefits, and Private Retirement Accounts in the Face of the Retirement Crisis

Source: Jack VanDerhei, Employee Benefits Research Institute (EBRI), EBRI Notes, Vol. 35, no. 1, January 2014

From the summary:
– For years, EBRI research has documented and quantified the role of Social Security, defined benefit and private retirement accounts on retirement income adequacy for Baby Boomers and Gen Xers in the United States. This report summarizes that research and presents new evidence on the importance of 401(k) plans for workers currently entering the workforce.
– EBRI’s modeling shows a substantial improvement in in the probability of attaining a financially successful retirement if workers are eligible for automatic enrollment in a 401(k) plan, compared with voluntary enrollment.
– Assuming current Social Security benefits are not reduced, between 83 and 86 percent of workers with more than 30 years of eligibility in a voluntary enrollment 401(k) plan are simulated to have sufficient 401(k) accumulations that, combined with Social Security retirement benefits, will be able to replace at least 60 percent of their age-64 wages and salary on an inflation-adjusted basis. The same analysis under automatic enrollment shows the probability of success increases substantially: 88–94 percent would be successful.

Unmarried Domestic Partners Benefits Fact Sheet, March 2013

Source: U.S. Bureau of Labor Statistics, Spotlight on Statistics, September 2013

Unmarried Domestic Partners Benefit Fact Sheet, March 2013
The “National Compensation Survey: Employee Benefits in the United States, March 2013” (Bulletin 2776) provides data on access to defined benefit retirement survivor benefits and health care benefits for unmarried domestic partners.

Highlights of these data include:
Defined benefit retirement survivor benefits …
Healthcare benefits …

Putting State Pension Costs in Context: How They Compare To The Cost Of Corporate Subsidies, Tax Breaks And Loopholes

Source: Good Jobs First, January 2014

From the press release:
State lawmakers who are considering drastic cuts to the retirement benefits of state workers are simultaneously giving away billions of dollars in corporate tax subsidies and loopholes, often in amounts far exceeding the cost of pensions, according to a new report.

Putting State Pension Costs in Context by Good Jobs First examines 10 states where elected officials are threatening to undermine retirement security by cutting the pension benefits of their teachers, firefighters, police officers, and hundreds of thousands of other public employees. The states included in the report are: Arizona; California; Colorado; Florida; Illinois; Louisiana; Michigan; Missouri; Oklahoma; and Pennsylvania.

The findings show that in each state, the revenue lost to corporations through loopholes and tax breaks outpaces the current cost of pension benefits to state employees….

National summary

Pennsylvania Pension Fact Sheet
Source: Stephen Herzenberg, Keystone Research Center, February 3, 2014

Finance 101

Source: Governing, 2014

This ongoing series goes back to the basics to help public officials navigate the sometimes-confusing world of GASB, OPEB, DBs and P3s.

Articles include:
Financial Illiteracy: One of Government’s Biggest and Least-Discussed Problems
Failure to understand financial outcomes is more dangerous to states and localities than ever, and there’s a big gap between what public leaders know about finance and what they need to know.

How Accountability and Transparency Are Improving Public Finance

These buzzwords can instill fear and trepidation in even the most progressive and tech-savvy public officials, but open information really does improve how cities operate.

Finance 101 Glossary
Crucial (and complicated) concepts in public money explained.

How Are Pensions Protected State-by-State?
Over the last century, states have adopted the idea that pensions are a form of deferred compensation and, along with that change, has come certain protections.

Learning to Love the Numbers of Government
Governments’ financial statements may seem intimidating to those without number-crunching expertise. But these documents contain important information that public officials need to know. Here’s how to find it.

What Cities Need to Know in the New Credit Ratings Era
As agencies revamp their criteria, seemingly conflicting actions have some scratching their heads.

Is There a Plot Against Pensions?
What may seem like a mathematical quibble has ballooned into an all-out war between two ends of the spectrum with no clear end in sight.

What’s the Point of Rainy Day Funds?
States and localities both save for unseen emergencies and hard times. But when it comes to using the funds, their approach couldn’t be more different.

Retiree Health-Care Benefits: The Next Shoe to Drop?

The rising cost of health care for retirees may force states and localities to make wholesale changes to their pension health plans.