Sunday, April 29, 2012

What’s Next?

In just a couple of weeks, tens of thousands of students (including a daughter of mine) will graduate from college.  For most, it’s a journey of joys, trials and tribulations, an education, not just from a textbook or a professor’s wisdom, but the insights that one can only get from actually living through a different stage of life.  Those students set out upon that journey years ago, and, doubtless following careful deliberation and the counsel of friends, families, and a few trusted advisors, a course was set.  A course that many “adjusted” – by choice and sometimes of necessity – over the course of the last few years, but a course for their future, nonetheless.

Now the question is – what will they do next?
As parents, we spend a lot of time, energy, and money trying to help our children make good choices, but at a certain point, most of us step back, grit our teeth (and sometimes close our eyes), and hope that they do.  Those decisions aren’t always the ones we would make – but, ready or not, they are made, sometimes for the better, sometimes not. 

Similarly, this industry has expended a lot of time, energy, and money over the years to try and help individuals make good decisions about preparing for retirement.  A growing number of individuals are now entering this new stage in their lives, and we ask ourselves, “Are they ready?”
In answer to that question, we can look at their individual situations and make certain projections about that readiness, based on their health, their gender, their income levels pre-retirement, and their likely levels of spending post-retirement, among other things[i].  But what will ultimately matter is what they do next – and that’s a factor not just of how much savings they have (or think they have) at the point of retirement, or the amount of other resources they may have available then (and thereafter), but how those resources are now invested, how they are invested over time, and how - and when – those resources are spent.

The factors that influence those decisions, as well as their results and potential consequences will, of course, continue to be a key focus for EBRI[ii] in the years to come – just as EBRI’s nonpartisan gathering, analyzing, and modeling the impact of behavioral, plan design, and regulatory influences has provided critical insights on those individual preparations for nearly thirty-five years now.
It matters because knowing what this generation does “next” is likely to be an important part of helping the next generation do better.

-          Nevin E. Adams, JD

[i] See EBRI Issue Brief July 2010 for more information on the EBRI Retirement Readiness Rating™ at  The 2010 update uses the most recent data and considers retirement plan changes (e.g., automatic enrollment, auto escalation of contributions, and diversified default investments resulting from the Pension Protection Act of 2006) as well as updates for financial market performance and employee behavior (based on a database of 24 million 401(k) participants).  Results will be updated next month, in our May Issue Brief.

[ii] More information on the EBRI Center for Research on Retirement Income is available at  For information about becoming a Research Partner, contact Nevin Adams, at

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