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Showing posts from May, 2012

Halfway, Honed

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Last week we published 1 the results of an update of EBRI’s Retirement Readiness Rating from the Retirement Security Projection Model® (RSPM). That model, which has been modified over the years to take into account certain structural and market changes, 2 projects that more than half (56 percent) of Boomers and Gen Xers will be able to retire with enough money to cover the cost of basic retirement needs as well as uninsured health care costs, including stochastic expenses from nursing home and home health care. 3 On the other hand, that same model projects that about 44 percent won’t have “enough” to cover those expenses. It’s worth noting that the trends are positive. Even after the toll of the 2008 financial crisis, the 2012 number of those at risk of running short is some 5−8 percentage points “better” than what was found in 2003. Moreover, the analysis is able to point to some important trends; eligibility for a workplace retirement plan remains a significant factor in reduci

State “Capital”

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I recently had the opportunity to attend The National Financial Capability Study Roundtable, where a variety of researchers (including EBRI’s Sudipto Banerjee) presented, discussed, and challenged a variety of research papers on topics ranging from financial literacy and retirement planning to financial advice, and from financial literacy and financial behavior to “Prohibition, Price Caps and Disclosure”.   Taken as a whole, the day’s discussions focused on ways to better understand and measure the factors that appear to influence individual behaviors regarding their finances.   Simply stated, financial literacy is generally described as the ability to understand finance.   More recently, some have begun to focus on financial capability 1 .   Research has shown that people with higher levels of financial literacy approach retirement with much higher levels of wealth.   However, a growing body of research also suggests that most Americans have limited knowledge about concepts such as

“Opportunity” Costs

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When I was 16, my family moved from a small town in Southern Illinois to the suburbs of Chicago.   It was a move that was to change my life in ways I could not have even imagined at the time.   Had that move not occurred, I’d likely have wound up at a different university, might well have chosen a different major, and almost certainly would never have stumbled across the college internship doing pension accountings that has, many years later, brought me here today.   As you might expect, those possibilities were not obvious to me at the time of that move.   But looking back, the reality is that that move greatly expanded the life choices—and thus, the opportunities—available to me at a particularly critical point in my life. At EBRI’s Research Committee meeting this past week, Research Director Jack VanDerhei shared the updated findings of the EBRI Retirement Readiness Rating (RRR), which will be published later this month.   The Retirement Readiness Ratings measure the percent

Confidence Intervals

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Last week, House Ways and Means Committee Chairman Dave Camp (R-MI) released a report that included responses from more than 70 percent of America’s Fortune 100 companies—a report that indicated that those employers could “save hundreds of millions of dollars a year under the new health care law by simply terminating health insurance for their workers and dumping these employees into taxpayer-funded health care exchanges.”   This, of course, follows recent arguments challenging the constitutionality of the Patient Protection and Affordable Care Act (PPACA) before the United States Supreme Court—with a ruling anticipated by the end of June.   At which point, regardless of the outcome, healthcare reform seems likely to remain an issue for the 2012 political campaign.   What remains to be known is what that will mean for employment-based health coverage (1) —and American’s confidence in their health care system.      Last year, EBRI’s Health Confidence Survey (2) noted that, in