May 2018

18May

America’s back-up retirement plan: Work

America's backup retirement plan is, well, work. More than one in three American workers are using the "gig economy" to find full- or part-time work, and for roughly one-third of that group, the side gig is specifically aimed at increasing their retirement savings, according to a new study by financial advisory firm Betterment. Perhaps not surprisingly, the older the worker, the more likely the side gig is aimed at building that retirement nest egg. Just 42 percent of those under...

May 18, 2018
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16May

US. An increasing number of savers are rejecting retirement accounts in favor of these investments

More people are stashing their money in taxable accounts and less so in employer-sponsored retirement plans. Ownership of taxable brokerage accounts jumped 10 percentage points over the last five years, and checking, saving and CD accounts increased 9 percentage points, according to retail investor data firm Hearts & Wallets. Meanwhile, ownership rates remained the same for employer-sponsored plans like a 401(k), but consumers were contributing less — a total decline of 5 percentage points. Accounts with specialties, like Roth retirement plans...

May 16, 2018
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03May

Most Americans Don’t Invest In Stocks For Retirement, But Still Fear Next Market Downturn

Retirement is just around the corner for many baby boomers, but most are not feeling very confident about their retirement preparedness according to a Bankers Life Center for Secure Retirement research report. According to the report, less than one-third (31%) of middle-income boomers feel prepared for retirement and lower-income boomers feel even less prepared. So what is driving this lack of preparedness and uneasiness? According to Scott Goldberg, President of Bankers Life, the late 2000s financial crisis acted as a...

May 3, 2018
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April 2018

23Apr

Portfolio Choice, Trading, and Returns in a Large 401(K) Plan

By Pierluigi Balduzzi (Boston College), Julie R. Agnew (College of William and Mary) & Annika E. Sundén (Stockholm University) This paper examines portfolio choice, trading behavior, and realized rates of return of more than seven thousand 401(k) retirement accounts during the April 1994-August 1998 time period. The evidence on equity allocations is indicative of prudent behavior: on average our investors hold 40% of their 401(k) portfolios in stocks. In addition, patterns of stock allocations by marital status, age, and earnings...

April 23, 2018
Pension design,
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01Apr

How a New Bond Can Greatly Improve Retirement Security

By Adam Kobor (New York University (NYU)) & Arun Muralidhar (AlphaEngine Global Investment Solutions; George Washington University) There is a growing retirement crisis and most of the focus has been on the fact that individuals are not saving enough for retirement, may not have access to pension schemes, or are financially illiterate. However, the bigger issue might be that the assets/financial products available to investors, including those that offer legal protection to plan sponsors, may not be appropriate for the typical...

April 1, 2018
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March 2018

05Mar

How Persistent Low Expected Returns Alter Optimal Life Cycle Saving, Investment, and Retirement Behavior

By Vanya Horneff, Raimond Maurer & Olivia S. Mitchell This paper explores how an environment of persistent low returns influences saving, investing, and retirement behaviors, as compared to what in the past had been thought of as more “normal” financial conditions. Our calibrated lifecycle dynamic model with realistic tax, minimum distribution, and Social Security benefit rules produces results that agree with observed saving, work, and claiming age behavior of U.S. households. In particular, our model generates a large peak at...

March 5, 2018
Aging, Articles, Investing, Savings, , ,
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February 2018

19Feb

US. Spending Bill Sets Path to Fix a Looming Pension Crisis

The sprawling agreement to boost government spending reached by Republicans and Democrats this month quietly included a step toward defusing what could be a financial time bomb for 1.5 million retirees and hundreds of companies in the industrial Midwest and the South. The deal creates a select congressional committee to craft what could effectively be a federal rescue of as many as 200 so-called “multiemployer” pension plans — in which employers and labor unions band together to provide retirement benefits...

February 19, 2018
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16Feb

US. State Pensions Need Reforms, Not Fewer Options

Across the country, state and local pension systems have not amassed enough assets (stocks, bonds, and other financial investments) to cover the retirement benefits promised to current and retired state and local employees. This gap is referred to as the pension funds’ “unfunded liabilities”. According to the Pew Charitable Trusts, the unfunded liabilities of state-administered pension systems across the country were $1.1 trillion in 2015 – a 17 percent increase from 2014! According to the American Legislative Exchange Council, the...

February 16, 2018
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05Feb

A Framework for Analyzing Defined Benefit Pension Insurance: The Survivor Benefit Plan for Veterans

By William W. Jennings (U.S. Air Force Academy - Department of Management), Jeff Merrell (University of Colorado at Boulder - Leeds School of Business) Thomas O'Malley (U.S. Air Force Academy - Department of Management) & Brian Payne (US Air Force Academy) Millions of defined benefit pensioners must select a pension insurance method. We present a framework for making this decision within the context of US military veterans’ Survivor Benefit Plan (SBP). Federal government subsidies generate a positive expected net payout...

February 5, 2018
Articles, Pension design, Regulation, , ,
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02Feb

US. As Super Bowl approaches, NFL pension plan still underfunded

As fans everywhere prepare to sit down with bowls of chili and platters of wings to watch the Super Bowl, they might be interested to know that pro football players could be facing some of the same pension problems their fans are: the NFL Players’ Pension Plan is only 73 percent funded, according to an analysis from the Society of Actuaries. That’s based on data from 2015, the most recent year for which data is publicly available, and it is an improvement...

February 2, 2018
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