From the abstract:
This paper provides new results showing how many years into retirement Baby Boomer and Gen Xer households are simulated to run short of money, by preretirement income quartile. It begins with a brief introduction of the various methods of quantifying retirement income adequacy, along with a description of EBRI’s Retirement Security Projection Model® (RSPM). This is followed by a series of results from the RSPM focusing on the percentage of Baby-Boomer and Gen-Xer households simulated to run short of money in retirement, as well as an estimate of how soon after retirement this is expected to take place. In that there are different perspectives on the flexibility of individuals in retirement to adjust lifestyle and/or spending, results are presented under three separate thresholds of deterministic expense (80, 90 and 100 percent of average expenses), as well as with and without nursing home and home health-care expenses. Under a variety of simulated post-retirement expense scenarios, the lowest preretirement income quartile is the cohort where the vast majority of the retirement readiness shortfall occurs, and the soonest. When nursing home and home health-care expenses are factored in, the number of households in the lowest-income quartile that is projected to run short of money within 20 years of retirement is considerably larger than those in the other three income quartiles combined. Extending the results to a maximum of 35 years in retirement (age 100, assuming retirement at age 65), 83 percent of the lowest-income quartile households would run short of money and almost half (47 percent) of those in the second-income quartile would face a similar situation. Only 28 percent of those in the third-income quartile and 13 percent of those in the highest income quartile are simulated to run short of money eventually. In presenting these results, EBRI does not favor or oppose any specific modification to the current retirement system. Rather, EBRI’s mission remains to provide objective analysis that can inform decision making by others. As the various design and program modification alternatives are debated (both reforms and status quo), it is instructive to keep in mind who’s most likely to come up short in retirement, when, and why.
From the press release:
Over the past four decades, women have played increasingly important roles as breadwinners in their families. At the same time, women’s share of unpaid care work and housework has remained high. A new report from the Center for Economic and Policy Research (CEPR), “Women, Working Families, and Unions,” explores the role unions play in addressing the challenges facing working women and families in balancing their work and family responsibilities. The paper looks at trends in unionization for women; the impact of unions on wages, benefits and access to family and medical leave; and the role of unions in addressing work-life balance issues. … The report finds that unions increase access to benefits that help working families succeed in this economy. Women in unions are 36 percent more likely to receive health insurance benefits through their jobs and 53 percent more likely to participate in an employer-sponsored retirement plan….
A third annual Nurses Retirement Study recently released from Fidelity Investments provides new insights into nurses’ overall financial confidence and outlook toward retirement. The study shows that nurses’ retirement savings are up; one-quarter (26%) of nurses with a workplace retirement savings plan have accumulated assets of more than $100,000, up from 18% in 2011. Yet, many are still not confident they will have enough to retire.
from the abstract:
Pension plans for state and local employees are, as a whole, significantly underfunded. This underfunding creates intense fiscal pressure on governments and often either crowds out other desired governmental spending or results in employees and retirees losing earned benefits. Political theorists often explain that underfunded public pension plans are all but inevitable given the political realities that affect funding decisions. Politicians who desire to be reelected should rationally prefer to spend money on current constituents, rather than commit scarce funds to a pension plan to pay benefits due to workers decades in the future. These dynamics are exacerbated by existing state fiscal constitutions that require balanced budgets and often restrict the ability to raise taxes. Paying a pension plan less than the amount due provides an easy way to free up money in the state budget by creating a form of debt that is not reflected on the state’s balance sheet. This article presents original analysis of the effect that state fiscal constitutions – even those that contain explicit requirements to fund public pension plans – impact public pension funding dynamics. It finds that even where explicit constitutional funding requirements are in place, plans often continue to be underfunded both because of political and financial pressures, and also because of the distinct lack of an enforcement mechanism. The article concludes by suggesting that these weakness in pension funding requirements can be addressed through the creation of clear and objective funding standards and, most importantly, through the creation of enforcement mechanisms that can, where appropriate, override legislative decisions to underfund public pension plans.
From the abstract:
This is the introduction and summary to the sixth phase of an ongoing project on Social Security Programs and Retirement Around the World. The first phase described the retirement incentives inherent in plan provisions and documented the strong relationship across countries between social security incentives to retire and the proportion of older persons out of the labor force. The second phase documented the large effects that changing plan provisions would have on the labor force participation of older workers. The third phase demonstrated the consequent fiscal implications that extending labor force participation would have on net program costs – reducing government social security benefit payments and increasing government tax revenues. The fourth phase presented analyses of the relationship between the labor force participation of older persons and the labor force participation of younger persons in twelve countries. We found no evidence that increasing the employment of older persons will reduce the employment opportunities of youth and no evidence that increasing the employment of older persons will increase the unemployment of youth. The fifth phase on “Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms” was intended to set the stage for this current phase.This sixth phase of the ongoing ISS project is particularly related to the fifth phase (Wise, 2012) and the second phase (Gruber and Wise, 2004) of the project. This volume continues the focus of the previous volume on DI programs while extending the methodology to study retirement behavior used in the second phase to focus in particular on the effects of the DI programs. The key question this volume seeks to address is: given health status, to what extent are differences in labor force participation across countries determined by the provisions of disability insurance programs?
From the summary:
Local and state governments continue their hiring trend although their workforces are still smaller since the 2008 economic downturn; recruitment and retention continue to be challenges; and pressure on benefits continues, particularly health care.
This annual survey was conducted by the Center, International Public Management Association for Human Resources, and National Association of State Personnel Executives of human resource professionals. Two hundred ninety-eight (298) IPMA-HR and NASPE members took part in the survey, which was conducted in March and April 2014.
∙ 66 percent of respondents reported hiring employees in the past year.
∙ 55 percent reported hiring more than they did in 2012.
∙ One-third reported hiring contract or temporary workers.
At the same time, the pace of retirements quickened:
∙ 49 percent reported higher levels of retirement in 2013 than 2012.
∙ 22 percent reported employees had accelerated their retirement.
Changes to benefits continue:
∙ 61 percent reported their government made changes to health benefits for both active and retired employees.
∙ The most common changes were to shift more costs from the employer to employees (53 percent) and to institute wellness programs (31 percent).
∙ 35 percent reported their government altered retirement benefits over the last year.
∙ About one-fourth required increased contributions to pensions from both current and new employees.
Looking ahead, the majority of respondents say their top concerns are:
∙ recruiting and retaining qualified personnel
∙ staff development
∙ succession planning
∙ employee morale
∙ competitive compensation packages
∙ public perception of government workers
∙ reducing employee health care costs
∙ dealing with increased employee workloads
From the abstract:
The Great Recession that began in late 2007 had devastating consequences for the fiscal health of state and local governments, and many remain in a precarious financial position. Several cities have declared bankruptcy, and more will do so in coming years. The future, however, promises no long-term relief. Due primarily to the aging population of the United States, state and local governments are allocating large and increasing shares of their budgets to expenditures on Medicaid and on retirement benefits that they have promised to their past and current employees. As these expenditures consume more of their budgets, there is less to spend on transportation, parks and recreation, education, public safety, and all the other services that these governments provide. We are thus experiencing the onset of a New Fiscal Ice Age, a period in which a given level of tax revenue purchases a considerably lower level of current services.
Related: Research Findings
The extensive literature documenting differences in wages between immigrant and native-born workers suggests that immigrants may enter retirement at a significant financial disadvantage relative to workers born in the United States. However, little work has examined differences in retirement resources and retirement security between immigrants and natives. In this article, we use data from the Health and Retirement Study linked with restricted data from the Social Security Administration to compare retirement resources of immigrants and natives. Our results suggest that while immigrants have lower levels of Social Security benefits than natives, when holding demographic characteristics constant, immigrants have higher levels of net worth. The estimated immigrant differentials vary a great deal by number of years in the United States, with the most recent immigrants being the least prepared for retirement.
This fact sheet provides data on the percentage of American workers who have access to and who participate in employer-sponsored pension plans. The data are from the National Compensation Survey (NCS), which is conducted by the Bureau of Labor Statistics (BLS). The NCS provides data on occupational earnings and the availability of employee benefits among U.S. workers.