Nevin's Data "Points"

What does it mean to have a 75% probability of success? I’ve never been particularly fond of the probability-of-success measures commonly used in retirement planning. It’s not that the calculations aren’t useful — or that I have a better crystal ball. I’m just not convinced that most people understand what the resulting percentage means, much less how to apply it to their retirement decisions. After all, a 75% probability of success sounds like a grade — and not a particularly good one. It also sounds as though there is a 25% chance that your retirement will be a complete and unmitigated failure. Neither interpretation is necessarily accurate. ad space A new paper from David Blanchett at PGIM, aptly titled “Successfully Failing,” takes on that conventional measure and suggests that it may not simply be confusing. It may actually lead retirees — and those advising them — to make less-than-optimal decisions. Success ‘Measures’ Probability-of-success calculations generally run a retireme...

While the prospects for “comprehensive tax reform” may seem remote in this highly charged election year, the current tax preferences accorded employee benefits continue to be a focus of much discussion among policymakers and academics. The most recent entry was a report by the Urban Institute which simulated the short- and long-term effect of three policy options for “flattening tax incentives and increasing retirement savings for low- and middle-income workers.”  The report concluded that “reducing 401(k) contribution limits increases taxes for high-income taxpayers; expanding the saver’s credit raises saving incentives and lowers taxes for low- and middle-income taxpayers; and replacing the exclusion for retirement saving contributions with a 25 percent refundable credit benefits primarily low- and middle-income taxpayers, and raises taxes and reduces retirement assets for high-income taxpayers.” However, and to the authors’ credit, the report also noted that “the behavioral ...