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Towards a Secure Retirement: Challenges and Solutions

Paper Session

Friday, Jan. 6, 2017 7:30 PM – 9:30 PM

Hyatt Regency Chicago, Gold Coast
Hosted By: Labor and Employment Relations Association
  • Chair: Charles Jeszeck, U.S. Government Accountability Office

Will I Just Have to Work Forever? Current Retirement Savings of Older Americans and Their Consequences

Shilpa Grover
,
U.S. Government Accountability Office
Laura Hoffrey
,
U.S. Government Accountability Office

Abstract

We examine retirement savings among older Americans and the adequacy of such savings for maintaining one's standard of living into retirement. According to our analysis of survey data, many retirees and workers approaching retirement have limited financial resources. About half of households age 55 and older have no retirement savings and many of these households have few other resources. Among those with some retirement savings, the median amount of these savings is about $104,000 for households age 55-64 and $148,000 for households age 65-74. As to the potential adequacy of such savings, studies the authors analyzed ranged widely in their conclusions about the degree to which Americans are likely to maintain their pre-retirement standard of living in retirement. However, the studies generally found about one-third to two-thirds of workers are at risk of falling short of this target. As compared to current retirees, workers age 55 and older expect to retire later and a higher percentage plan to work during retirement. However, about half of retirees report retiring earlier than planned, suggesting that many workers may be overestimating their future retirement income and savings.

Shortchanged in Retirement: Continuing Challenges to Women's Financial Future

Jennifer Erin Brown
,
National Institute of Retirement Security

Abstract

This report, which is based on the authors' analysis of the 2012 Survey of Income and Program Participation (SIPP) data from the United States Census, examines the distinct challenges posed by the current retirement system of Social Security, pensions, and savings for working-age women, retirement-aged women, and retired women. Specifically, this report examines the labor participation rates of women approaching retirement; women's access, eligibility, and participation in employer sponsored retirement plans; sources of income for women aged 65 and older; and poverty rates of women aged 65 and older. We also provide an overview of proposed policy solutions that reduces women's vulnerability to financial hardship as they age. Findings include that women are 80 percent more likely than men to be impoverished at age 65 and older, while women between the ages of 75 to 79 are three times more likely than men to be living in poverty; and women in the health care, education, and public administration fields, where DB pension plans are more prevalent, have higher incomes in retirement and lower rates of poverty than in other industries, due to their increased participation in DB pension plans.

Employer and Employee Reactions to State-Level Retirement Savings Initiatives for Private Sector Workers

Sarah Spell
,
Pew Charitable Trusts

Abstract

Approximately one-quarter of the American private sector workforce lacks access to a retirement plan at their workplace, and relatively few save for retirement outside of a workplace retirement plan. However, evidence is growing that many face a reduced standard of living when they reach retirement. To address these problems, several states are considering implementing statewide retirement savings plans for private sector workers who do not have a plan at their workplace. Many of these state proposals rely on tools from behavioral economics; for example, automatic enrollment at hire and automatic escalation of contributions as well as requiring employers to enroll employees if there is no employer-sponsored retirement plan. While these tools have proven to be very effective in large corporate retirement plans, participants likely to be covered by these state-sponsored plans are expected to be different demographically than the employee population in large corporate retirement plans. Using separate national surveys of small to medium size business owners and of workers in similar size firms in addition to focus groups, we examine how employers and workers would react to these policy proposals. In particular, we pose different scenarios in order to understand reactions and possible behavior that could be expected to occur when these state plans are implemented. We find evidence that workers and employers are supportive of these auto-IRA plan proposals and are similarly supportive of both a 3 percent and 6 percent default contribution rate. However, the proposed policies must be clear about the respective roles of employers and government in these plans.
Discussant(s)
Christian Weller
,
University of Massachusetts-Boston
Heather Grob
,
Saint Martin's University
Michele Varnhagan
,
AARP
JEL Classifications
  • J2 - Demand and Supply of Labor