+Retirement Dynamics and Lifestage Planning

The Role Private Savings and Strategic Planning in an Aging Society

+Trends in Personal Savings Rate in America:

+

The Historical Context of Savings in America

+ Amount of Savings Workers Think They Need for Retirement:

Source: EBRI/MGA 2010 Retirement Survey

+Critical Questions?

  How can government encourage individuals to plan and save for their retirement?

  How can we protect the elderly from poverty while containing government expenditures?

  How is the role of the private sector in retirement planning going to change over the next 50 years?

+How do we Pay for Retirement:

  Half of all American workers are are not covered by a retirement plan.

  Planning to retire on Social Security? Today’s average benefit for a retired worker is only about $10,000 per year. For current retirees, Social Security benefits account for 39 percent of their income; for two thirds of Social Security beneficiaries, it is the major income source.

1) The Boards of Trustees, 2009 Annual Report (Wash., D.C.: Federal Hospital Insurance and Federal Supplementary Insurance Trust Funds, May 12, 2009).

+

Self Reported Trends in Income Sources for Current and Future Retirees

+The Consumer’s Greatest Fear:

+Work in the Golden Years:

+Comparative Analysis:

•  The purpose of saving is to increase the resources available for future consumption.

•  Today’s saving influences future consumption because investments in financial assets are channeled into productive investments in factories, industrial machinery, computers, and other kinds of capital.

+Advocacy Issues:

How can we advocate for both the elderly and those who are stuck paying for their retirement needs. This is a multifaceted issue that effects the entire nation. Youth are saddled with insurmountable national debt and care costs and the elderly are stuck facing costs they never dreamed about. What can we do? Here’s a few ideas to use when debating this topic:

  Link the concerns of the elderly to other segments of society. Convey that affordable quality care for the elderly benefits the entire U.S. economy.

  Get others involved – your influence is multiplied when you can get others to join you in with your efforts; talk to people, explain the issues, share with them what they can do to make a difference. Everyone has a grandparent, everyone pays taxes (hypothetically), and nearly every nation has debt.

  Keep the burden placed on future generations in perspective. The elderly are not the only people affected by the growth in national health care expenditure.

+Policy Options:

  To increase retirement plan coverage for the millions of workers not covered by an employer-sponsored pension plan and the possibility that payroll-deduction IRAs can help bridge the coverage gap, examine ways to better encourage employers to offer and employees to participate in these IRAs that could include:   examining and determining the financial and administrative costs

to employers for establishing payroll-deduction IRA programs, especially for those employers that do not have an automatic payroll system in place;

  developing policy options to help employers defray the costs associated with establishing payroll-deduction IRA programs, while taking into consideration the potential costs to taxpayers and small employers; and

+Policy Options Cont.

  Evaluating whether modifications or clarifications to its guidance on payroll-deduction IRAs are needed to encourage employers to establish payroll-deduction IRA programs.

  To improve the federal government’s ability to regulate employer- sponsored and payroll-deduction IRAs and protect plan participants, evaluate ways to determine whether employers who establish employer-sponsored IRAs and offer payroll-deduction IRAs are in compliance with the law and the safe harbor provided under Labor’s regulations and Interpretive Bulletin 99-1, while taking employer burden into account.

  To improve the federal government’s ability to better assess ways to improve retirement plan coverage for workers who do not have access to an employer-sponsored retirement plan, and to provide Congress, federal agencies, and the public with more usable and relevant information on all IRAs, evaluate ways to collect additional information on employer-sponsored and payroll-deduction IRAs, such as adding questions to the Bureau of Labor Statistics National Compensation Survey.

+Conclusion:

  If action is not taken to inform individuals about the importance of individual retirement planning, facilitate higher levels of savings, and to contain costs for both the public and private sector the US will likely careen into a retirement savings crisis.

  There is dramatic change underway in the expectations individuals have for their retirement. For the private sector there is an opportunity to capture extra working years from experienced professionals and to sell a higher volume of financial products to those planning for their retirement. The public sector has a chance to push for substantive reform given that constituents already acknowledge that the system is failing.

+Want to Know More:

The A. Alfred Taubman Center at Brown University offers full courses taught by private and public sector experts associated with the As America Ages Project. For a full listing of events, courses, and recent research please visit:

http://www.brown.edu/Project/As_America_Ages/

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