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Kids, Confidence — and Causation

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It seems that having kids can be good for your retirement confidence. At least that’s the headline regarding a new survey from Allianz Life that finds that Americans without children are significantly less confident in their ability to meet their retirement savings goal — 54%, compared with 72% of those with children. Now I’m sure that result is supposed to be counter-intuitive because — let’s face it — kids are expensive. There’s food, clothing, childcare, education, healthcare and, in some cases, financial support long after they have theoretically “left” the nest. So, it would seem logical that Americans without children would have more money available for retirement — and greater confidence about their prospects. [i] ad space Parental Planning? Well, as it turns out, it may not be children that account for the confidence — at least not directly. Rather, Allianz suggests that parenthood may provide a catalyst for financial planning. According to the survey, 62% of Americans without...
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Spending Their Inheritance?

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   Apparently, Baby Boomers have some ‘splainin to do. Yes, after decades of being blamed for everything from the demise of defined benefit pensions to the price of housing, Boomers are now being castigated for something else: spending the money that their children were (apparently) counting on inheriting. Indeed, there’s been a lot of talk about the so-called “Great Wealth Transfer” — and lately a fair amount of consternation that Boomers might actually spend some of that wealth before they die. Which got me wondering: How much did the Boomers actually inherit from their parents? Turns out, for most, not all that much. Back in 2011, researchers at Boston College’s Center for Retirement Research [i] took a specific look at that question. They estimated that about two-thirds of Boomer households would ultimately receive an inheritance. And that median expected inheritance was ... (just) $64,000 . Now, $64,000 is certainly nothing to sneeze at. But neither is it the kind of ge...
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20 Years Later, Did the PPA Really Change Everything?

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Twenty years ago, I authored [i] a cover story about the then-newly enacted Pension Protection Act of 2006 with an ambitious headline: “The Pension Protection Act: This Changes Everything.”   Twenty years later, it seems like a reasonable time to ask: Did It? The short answer, I think, is yes — though probably not quite in the ways we expected in 2006. The PPA was a sweeping piece of bipartisan legislation, addressing among other things defined benefit funding, pension accounting, and cash balance plans — it was titled the PENSION Protection Act, after all.  And it was, for the benefits promised by those plans, an important defensive measure. [ii]    However, to my eyes then — and now — the most lasting influence of the PPA was on the defined contribution side, where it helped change not just plan design, but the industry's thinking about participant behavior. To Appreciate 2006, Go Back to 1986 Twenty years earlier, the Tax Reform Act of 1986 had significantly tigh...
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