Nevin's Data "Points"

 A new report entitled “The Missing Middle” by the National Institute on Retirement Security (NIRS) treads some all-too-familiar ground, myopically focusing on one element of the nation’s private retirement system. The articulated concern is, of course, the “middle”—an income grouping for which Social Security’s progressive structure doesn’t reach high enough to provide an adequate replacement income, but that lacks the more expansive financial wherewithal of those at the upper end of the income strata. According to the paper, the tax incentives that arguably existed at the birth of the 401(k) have been muted due to lower marginal tax rates and the expansion of the standard deduction—both of which serve to mitigate the tax burden on lower-income individuals—but in the process also arguably lessen the financial incentive for deferring taxes. And if that were not enough, the authors also argue that the “…tax benefits relating to investment returns may be less in a ma...

 A new paper rehashes (and embraces) some old beliefs, blatantly ignores the full impact of workplace savings, disregards the reality that deferrals are temporary—and kills a lot of trees in the process.   The diatribe’s author, perhaps because he’s affiliated with a law school, perhaps because the paper (provocatively titled “ The Great American Retirement Fraud ”) is so long (82 pages), managed to get what amounts to a long-winded pontification published by the Social Science Research Network [i] —a network that normally publishes research.  There’s little new here, and painfully little substance—though he does affix a label—“the Retirement Reform Project”—to the “conspiracy” he crafts between employers, investment management firms, advisors and those that support their interests. At the crux of this imagined conspiracy is none other than Rob Portman and Ben Cardin. Yes, that Portman and Cardin!   Reform ‘School’? Indeed, he claims this “...

Just when you thought retirement plan projections couldn’t get any worse… Last week the National Institute on Retirement Security released a report – “ Retirement in America | Out of Reach for Most Americans? ” that claimed that the median retirement account balance among all working individuals is… $0.00. Moreover, that same report claims that “57 percent (more than 100 million) of working age individuals do not own any retirement account assets in an employer-sponsored 401(k)-type plan, individual account or pension.” It’s not the first time the NIRS has produced reports finding significant problems with the nation’s private retirement system. Indeed, this report “builds on previous NIRS research published in 2015,” though the conclusions presented here seem unusually stark. Then, as now, the NIRS conclusions rely heavily on self-reported numbers from the Federal Reserve’s Survey of Consumer Finances (SCF) and the U.S. Census Bureau’s Survey of Income and Program P...

One of my favorite cinematic quotes is from that Clint Eastwood classic, “Dirty Harry.” It comes at the very beginning of the movie – there’s a bank robbery in process, and Clint Eastwood (in the personage of Inspector “Dirty” Harry Callahan) is trying to wolf down a hot dog when the commotion starts up. Harry, clearly irritated, gets up and heads out, and proceeds to shoot it out with the robbers, and then strolls over to the one who is still breathing, who has a shotgun within reach. Harry proceeds to point out the attributes of his .44 Magnum as he wonders aloud if he still has any bullets left, as the wounded robber contemplates his chances of getting to his shotgun before Harry pulls the trigger. At that point, Harry reminds him: “You’ve got to ask yourself one question: ‘Do I feel lucky?’ Well, do ya, punk?” When reading the various surveys of workers who seem confident about their retirement prospects – or don’t – when most haven’t even tried to figure out how ...

As spring follows winter, so apparently do dire predictions about the nation’s retirement prospects. For example, the Center for Retirement Research (CRR) at Boston College now claims we are looking at a $7.7 trillion dollar “retirement gap” for American workers, up from $6.6 trillion five years ago. Meanwhile, a new report by the National Institute on Retirement Security (NIRS) on what it called the “Continuing Retirement Savings Crisis” didn’t cite a specific aggregate gap, but a year ago NIRS employed a similar approach to suggest that that gap was likely somewhere between $6.8 trillion and $14 trillion. While these outcomes are cited widely (the CRR’s as recently as last week in a U.S. Senate hearing ), the underlying methodologies and assumptions are worth understanding. Both rely heavily on self-reported numbers from the Federal Reserve’s Survey of Consumer Finances (SCF), and while both track the progress of American retirement readiness by examining how individuals in the...