Nevin's Data "Points"

Back when I was in school (OK, so it was  way  back), there were these little red fire alarm boxes strategically placed throughout the building. Their purpose was clearly indicated in big white letters… but, inevitably, as the school year wound to a close…   Well, it seemed that someone was always pulling those levers, and no, not because of any actual fire—but rather because some hapless soul had been pressured to create a nuisance, but more commonly just because some upper classman was looking to avoid a test for which they weren’t prepared, or wanted to get outside and enjoy the fresh air. Initially these emergency calls got the expected response, and we all dutifully filed down the stairs and out to our designated areas. And, sure enough, by the time the building was evacuated, the premises sufficiently investigated, and the student body returned to our respective classrooms—well, it left little time for actual instruction, for a period, at leas...

A recent headline  in  The Wall Street Journal  started off: “Forget the 401(k).” And then, unintentionally, proceeded to explain why that would be… nuts. Not that the author (Jason Zweig) didn’t throw in some digs at the subject, making a glancing reference to what he termed “the rigid and often paltry 401(k)s that workers have today” before going on to berate America’s retirement plan, dismissively claiming that “there’s little question that the 401(k) as we know it just isn’t getting the job done.” That, of course, depends on what one considers “the job” – though, to his credit - and I generally appreciate Jason's perspectives - he didn’t fall into the common journalistic device  of pining for the “good old days of the defined benefit plan.” Quite the contrary, he bluntly proclaims (in language that one rarely sees attributed to DB plans) that even in their heyday, “defined-benefit plans were, in fact, sporadic, arbitrary and unfair.” (This is a ...

Most people view automatic enrollment in a 401(k) as a good thing 1  – but apparently it has a heretofore unappreciated “dark” side. At least that was the focus of a headline in a recent Wall Street Journal article  (subscription required) that asked (and answered) the provocative question: “401(k) or ATM? Automated Retirement Savings Prove Easy to Pluck Prematurely.” That is at least how the Journal chose to position its coverage of a study based on a single firm’s experience with automatic enrollment. That study , according to the Journal , serves to “answer a question that has long concerned employers that put workers into 401(k) plans and give them the option to drop out, rather than requiring them to sign up on their own: Will auto-enrolled workers treat their 401(k)s like automated-teller machines?” Now, I’ve heard a lot of questions over the years from plan sponsors about automatic enrollment – but never that one. Regardless, the Journal says ...

You have to wonder what the Wall Street Journal has against automatic enrollment. The latest instance of finding the cloud in this silver lining arose in a recent Journal article by Anne Tergesen, “ Downside of Automatic 401(k) Savings: More Debt ” (subscription required). The article, based on the findings of a recent academic study , says that automatic enrollment has “pushed” millions of people who weren’t previously saving for retirement into those plans – but quickly cautions that “many of these workers appear to be offsetting those savings over the long term by taking on more auto and mortgage debt than they otherwise would have.” This “crowding out” concern – that automatic enrollment would stretch already strained financial resources, particularly among lower-income workers – has long been a sticking point for those advocating caution regarding automatic enrollment. The Study So did the study – drawn based on what the researchers termed a “natural experim...