August 2021
26Aug

US. Retirement Tax Benefits Exacerbate Racial Inequities

By Steve Rosenthal In a recent report co-authored with University of Chicago Professor Daniel Hemel, I described how our retirement tax system favors the rich disproportionately. Read also A New Look at Racial Disparities Using a More Comprehensive Wealth Measure But it’s worse than that: Our system of generous tax subsidies for retirement savings—such as 401(k) plans, other defined contribution plans, and individual retirement accounts (IRAs)—also exacerbates racial inequities. Due in part to these tax breaks, the gap between the average retirement...

August 26, 2021
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25Aug

How Blockchain Can Transform Retirement Planning

Retirement planning deals with massive amounts of data clusters across multiple processes. Keeping participants’ assets safe is one of the major responsibilities of plan providers to ensure customer trust. Read also Canada. Union Files Legal Challenge Over OMERS’ Early Retirement Policy Defined contribution (DC) plans such as the National Pension Scheme in India and 401(k) in the US have become mainstream, but there is no designated registry to track all the retirement plan accounts and their status on one platform. The...

August 25, 2021
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25Aug

Why The Decline In Life Expectancy Shouldn’t Affect Your Retirement Plans

By Bob Carlson Average life expectancy in the U.S. declined by 1.5 years in 2020, according to a recent report from the Centers for Disease Control and Prevention. That is believed to be the largest one-year decline in life expectancy since at least World War II. Life expectancy was 77.3 years in 2020, about the same level as in 2003. Life expectancy should be a major factor in retirement planning. I often recommend that one of the first steps in developing a...

August 25, 2021
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24Aug

US. Companies Find It’s a Good Time to Push Pension Obligations Off Balance Sheets

Finance chiefs are stepping up their efforts to move pension obligations off company balance sheets through annuity purchases and other financial tools, taking advantage of well-funded plans and a respite from the scramble over the past year to deal with the Covid-19 pandemic. For years, sponsors of single-employer pension plans have purchased annuities from an insurer for all or some of their employees with vested benefits, thus shrinking a plan’s assets and liabilities and simultaneously strengthening a company’s balance sheet....

August 24, 2021
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24Aug

US. Despite the pandemic, 401(k) balances and savings rates are higher than ever

Even with climbing Covid-19 case numbers and ever-increasing inflation, employed retirement savers have been socking away record amounts of cash in their retirement investment accounts. Average 401(k) account balances and savings rates reached record highs in the second quarter of 2021, according to Fidelity Investments, the nation’s largest provider of 401(k) plans, marking three quarters of upward growth in a row. Another positive sign for savers’ finances: The number of outstanding 401(k) loans also decreased. At the start of the coronavirus pandemic,...

August 24, 2021
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23Aug

US. Why Is Gen Z Saving More for Retirement Than Their Parents?

By Ben Geier, CEPF A 2021 survey from TransAmerica says that the youngest generation of American adults is getting a jumpstart on retirement by saving a lot earlier than older generations. Financial experts will point out that this is in part due to the decline of pensions and the rise of defined contribution plans like 401(k)s, which allow employees to invest part of their paycheck into a tax-advantaged retirement account. In fact, Gen Z could be the first generation to...

August 23, 2021
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20Aug

Why Tontines Should Be a Piece of the Retirement Solution

By Jasmin Sethi Retirees are often faced with the fear of outliving their assets. This fear, also known as longevity risk, has been eased by the availability of annuities, specifically annuities that I’ve termed in my paper as guaranteed income products, or GIPs, that offer fixed payments until death. One would think that a product offering fixed payments for life would be more popular among retirees, but the reality is that Americans choose not to purchase annuities. Why? A big factor...

August 20, 2021
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20Aug

Here’s The Only Retirement Risk That Really Matters To You

Chances are at some point in your retirement saving (or spending) life you’ve been asked a question or two about your appetite for risk. For a while, back in the era of Modern Portfolio Theory, the whole concept of “risk” and the investor was the cat’s pajamas. In the old days they even had entire questionnaires designed to extract this information from you without you knowing it. That is until it became clear those little quizzes had about as much...

August 20, 2021
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19Aug

Pensions, Income Taxes and Homeownership: A Cross-Country Analysis

By Hans Fehr, Maurice Hofmann & George Kudrna This paper studies the role of pensions and income taxes in determining homeownership and household wealth. It provides a cross-country analysis, using tax and pension policy designs in Germany, the US and Australia. These developed nations have similar incomes per capita but very different homeownership rates, with the US and Australia having much higher homeownership compared to Germany. The question is to what extent the observed differences in homeownership are induced by...

August 19, 2021
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19Aug

Mega-IRAs, Boon or a Bane?

By Albert Feuer Peter Thiel reportedly converted a 1999 Roth IRA investment of $1,700 in PayPal “founder’s shares,” into assets that appeared to be worth $7 billion on June 30, 2021. There are serious questions whether this IRA and other Mega-IRAs are entitled to the IRA tax benefits. The IRS should have the resources to challenge the tax exemption of any Mega-IRAs appearing to violate the current law. These Mega-IRAs will disappear when the IRS prevails. There should also be...

August 19, 2021
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