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Showing posts from April, 2015

On Retirement Plans and Plans for Retirement

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When is a plan not a plan? When you have a retirement plan at work, apparently. The good news is that the 2015 Retirement Confidence Survey  shows a strengthening of retirement confidence — at least among those who had some kind of retirement plan (DB, DC or IRA). Indeed, among that group, the number saying they were very confident has doubled since 2013. The bad news? Well, there doesn’t seem to be much in terms of substantive savings accumulations 1 or planning behaviors to account for this uptick in confidence. Consider that fewer than half (48%) of workers report they and/or their spouse have tried to calculate — even a single time — how much money they will need to have saved by the time they retire so that they can live comfortably in retirement, a level that has held relatively consistent over the past decade. In other words, while many have (or had) a retirement plan, they don’t seem to have a plan for retirement.  On the other hand, workers reporting that they or th

3 (More) Pervasive Retirement Myths - an Academic Perspective

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Last week I highlighted three “myths” about the retirement system that will not die — all the more distressing because they are perpetuated by retirement industry pundits. Here are three more that (mostly) aren’t perpetuated by those who actually work with retirement plans, but by academics.  Academics who, sadly, are often listened to, and cited by those who regulate and legislate these programs. The Match Doesn’t Matter This doubtless comes as a surprise to those of us who work with retirement plans and retirement plan participants. More precisely, there are a few studies out there that suggest that a matching contribution doesn’t have a very strong impact on participation . The study that is cited most often in support of this one is one conducted several years ago in conjunction with H&R Block, where individuals were offered a financial incentive to take their tax refund and deposit it in an IRA . Most didn’t — and thus the notion that the promise of the match doesn’t pro

3 Pervasive Retirement Industry Myths

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Ours is a complex and complicated business — constantly changing and evolving. And yet, there are key fallacies about today’s retirement system — and how it compares with what used to be — that will not go away. Back in the good old days being “covered” by a pension plan meant you would actually get a full pension benefit. We’re routinely told that “once upon a time” individuals used to work for a single employer their entire career, and that most of those workers were “covered by a workplace retirement plan, frequently a defined benefit pension.” While defined benefit plans were certainly more common a generation ago, they were not as ubiquitous as is often assumed (see here ).   Moreover, while some workers did spend their working career at a single employer (and some still do, particularly in the public sector), the data show that for the very most part we have long been a nation of relatively short-tenured workers. How short? Well, the median job tenure in the United States

At Long Last, Retirement Confidence Surges

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New nonpartisan data has uncovered a major uptick in retirement confidence, as millions of Americans with access to workplace retirement plans finally took advantage of the wide array of resources long available to them. Those tools included the use of online calculators and the help of plan advisors . “I was always too busy to take advantage of these resources,” noted survey participant Jack V. Copeland. “Frankly, with all the negative coverage about retirement shortfalls and such, I didn’t see much point.” Not that the new research, published by the Oxford Newfound Institute of Nihilism (ONION), didn’t uncover retirement savings shortfalls among survey participants. However, with workers now taking the time to assess their personal situation, savings rate and projected retirement income needs, developing plans to address the situation rather than simply worrying about their dim prospects for retirement savings success became the order of the day. Previous research had shown that