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New Report Finds Public Sector Employees Uncertain about Retirement
New Report Finds Public Sector Employees Uncertain about Retirement
Source: TIAA-CREF
A new report released today by the Center for State and Local Government Excellence and the TIAA-CREF Institute finds that only 19 percent of full-time public sector workers are very confident in their retirement income prospects, with many expressing concern about the impact of rising health care costs.
The report – the 2012 Retirement Confidence Survey of the State and Local Government Workforce – surveyed more than 1,200 state and local government employees across the nation including public educators, police and firefighters.
The study found that only 16 percent of teachers and 25 percent of police and firefighters are very confident they are saving the right amount for retirement. In addition, a full 57 percent of public sector workers expect to work longer than they would like and 72 percent expect to work for pay after retiring.
"Much has been written about the financial condition of pension plans and plan reform in the public sector, but little has been documented about public sector workers’ confidence, expectations and behavior with respect to retirement planning and saving," said Paul Yakoboski, senior economist with the TIAA-CREF Institute.
In particular, the survey indicates the rising cost of health care is a factor in the tepid expression of overall retirement confidence. Only 22 percent are very confident that they will have enough money to take care of medical expenses during retirement and two-thirds are not confident that Medicare will continue to provide benefits of equal value to those provided today.
New From the GAO
New GAO Reports and Testimonies
Source: Government Accountability Office
+ Reports
1. Bus Rapid Transit: Projects Improve Transit Service and Can Contribute to Economic Development. GAO-12-811, July 25.
http://www.gao.gov/products/GAO-12-811
Highlights – http://www.gao.gov/assets/600/592974.pdf
2. Information Technology: DHS Needs to Further Define and Implement Its New Governance Process. GAO-12-818, July 25.
http://www.gao.gov/products/GAO-12-818
Highlights – http://www.gao.gov/assets/600/592930.pdf
3. Overseas Rightsizing: State Has Improved the Consistency of Its Approach, but Does Not Follow Up on Its Recommendations. GAO-12-799, July 25.
http://www.gao.gov/products/GAO-12-799
Highlights – http://www.gao.gov/assets/600/592966.pdf
4. Retirement Security: Women Still Face Challenges. GAO-12-699, July 19.
http://www.gao.gov/products/GAO-12-699
Highlights – http://www.gao.gov/assets/600/592727.pdf
5. Telecommunications: FCC Has Reformed the High-Cost Program, but Oversight and Management Could be Improved. GAO-12-738, July 25.
http://www.gao.gov/products/GAO-12-738
Highlights – http://www.gao.gov/assets/600/592958.pdf
6. United Nations Renovations: Best Practices Could Enhance Future Cost Estimates. GAO-12-795, July 25.
http://www.gao.gov/products/GAO-12-795
Highlights – http://www.gao.gov/assets/600/592922.pdf
+ Testimonies
1. Grants Management: Improving the Timeliness of Grant Closeouts by Federal Agencies and Other Grants Management Challenges, by Stanley J. Czerwinski, director, strategic issues, before the Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security, Senate Committee on Homeland Security and Governmental Affairs. GAO-12-704T, July 25.
http://www.gao.gov/products/GAO-12-704T
Highlights – http://www.gao.gov/assets/600/592996.pdf
2. Higher Education: Improved Tax Information Could Help Pay for College, by James R. White, director, strategic issues, and George A. Scott, director, education, workforce, and income security issues, before the Senate Committee on Finance. GAO-12-863T, July 25.
http://www.gao.gov/products/GAO-12-863T
3. Retirement Security: Older Women Remain at Risk, by Barbara D. Bovbjerg, managing director, education, workforce, and income security, before the Senate Special Committee on Aging. GAO-12-825T, July 25.
http://www.gao.gov/products/GAO-12-825T
4. Medicare Advantage: Quality Bonus Payment Demonstration Has Design Flaws and Raises Legal Concerns, by James Cosgrove, director, health care, and Edda Emmanuelli-Perez, managing associate general counsel, before the House Committee on Oversight and Government Reform. GAO-12-964T, July 25.
http://www.gao.gov/products/GAO-12-964T
Young and Mobile? State Pensions May Not Be an Appealing Match
Young and Mobile? State Pensions May Not Be an Appealing Match
Source: Urban Institute
Twenty-somethings fresh out of college or graduate school may need to rethink starting jobs in state government, cautions a report from the Urban Institute’s Program on Retirement Policy. The new recruits could end up paying for their state’s unfunded pension liabilities without much to show for their efforts.
Ninety-two percent of full-time state and local government workers in 2011 had access to a defined benefit retirement plan, the traditional pension that promises a set stipend from retirement until death. With state pensions underfunded by an estimated $2.7 trillion, however, many governors and legislators are seeking to close the chasm by increasing employee contributions, raising the age at which benefits become available, or reducing the plans’ generosity. While lowering pensions’ net costs to states, these shifts may make it harder for states to modernize their workforce.
In “Are Pension Reforms Helping States Attract and Retain the Best Workers?” Richard Johnson, Eugene Steuerle, and Caleb Quackenbush use New Jersey’s Public Employees Retirement System and its five waves of reform since 2007 to show how state pensions provide little incentive for young workers to join the state’s workforce, lock in middle-aged workers even if they are unproductive or unhappy, and push many older, seasoned workers into premature retirement.
The actuarial assumptions underlying reforms in New Jersey and some other states, the Urban Institute researchers explain, rely on contributions from new and younger employees to help pay off unfunded liabilities owed to workers hired before the reforms. New workers who don’t stick around “will get back only their own contributions plus interest, but compounded at a lower rate of return than the state assumes it will earn on plan assets.” In a sense, these reforms attempt to partially protect taxpayers and older workers already in the plans by shifting costs to the young, including future state employees.
Young workers who leave their jobs with fewer than 25 years of service “forgo nearly all retirement benefits from the employer. The more mobile the workforce and the stronger the desire to maintain the option of changing careers or moving to another state, the more this benefit structure discourages workers from entering state employment.”
Individual Retirement Account Balances, Contributions, and Rollovers, 2010: The EBRI IRA Database
Executive Summary
- In 2010, IRA owners were more likely to be male, especially those whose accounts originated from a rollover or were a SEP/SIMPLE. Among all IRA owners in the database, nearly one-half (45.8 percent) were ages 45–64.
- The average and median IRA account balance in 2010 was $67,438 and $17,863, respectively, while the average and median IRA individual balance (all accounts from the same person combined) was $91,864 and $25,296.
- Individuals with a traditional IRA originating from rollovers had the highest average and median balance of $123,426 and $38,138, respectively. Roth owners had the lowest average and median balance at $22,437 and $11,471. The average and median individual IRA balance increased with age through age 70.
- The average amount contributed to an IRA in the database was $3,335 in 2010. The average contribution was highest for accounts owned by those ages 65–69, and more contributions were made to Roth accounts than to traditional accounts (both those originating from contributions and rollovers). However, the average contribution to a traditional account was higher, at $3,517, compared with $3,240 to a Roth account. Yet, a higher overall amount was contributed to Roths ($2.3 billion for Roths compared with $1.3 billion for traditional accounts).
- Focusing on those owning traditional or Roth IRAs, 9.3 percent of the accounts received contributions, and 12.1 percent of the individuals owning these IRA types contributed to them in 2010. Among traditional IRA owners, 5.2 percent contributed, while 24.0 percent of those owning a Roth contributed to it during 2010.
- Of those individuals contributing to an IRA, 43.5 percent contributed the maximum amount. Of those contributing to a traditional IRA, 48.7 percent maxed out their contribution, while 39.3 percent did so with a Roth.
- The average and median account balances increased from $54,863 and $15,756 respectively in 2008 to $67,438 and $17,863 in 2010. This represents an increase of 22.9 percent in the average account balance and 13.4 percent in the median balance. The total individual balances also increased for both the average (32.2 percent) and the median (26.2 percent).
- The average and median rollover amounts were $69,012 and $17,614 respectively, compared with the average contribution of $3,335.
Individual Retirement Account Balances, Contributions, and Rollovers, 2010: The EBRI IRA Database
Executive Summary
- In 2010, IRA owners were more likely to be male, especially those whose accounts originated from a rollover or were a SEP/SIMPLE. Among all IRA owners in the database, nearly one-half (45.8 percent) were ages 45–64.
- The average and median IRA account balance in 2010 was $67,438 and $17,863, respectively, while the average and median IRA individual balance (all accounts from the same person combined) was $91,864 and $25,296.
- Individuals with a traditional IRA originating from rollovers had the highest average and median balance of $123,426 and $38,138, respectively. Roth owners had the lowest average and median balance at $22,437 and $11,471. The average and median individual IRA balance increased with age through age 70.
- The average amount contributed to an IRA in the database was $3,335 in 2010. The average contribution was highest for accounts owned by those ages 65–69, and more contributions were made to Roth accounts than to traditional accounts (both those originating from contributions and rollovers). However, the average contribution to a traditional account was higher, at $3,517, compared with $3,240 to a Roth account. Yet, a higher overall amount was contributed to Roths ($2.3 billion for Roths compared with $1.3 billion for traditional accounts).
- Focusing on those owning traditional or Roth IRAs, 9.3 percent of the accounts received contributions, and 12.1 percent of the individuals owning these IRA types contributed to them in 2010. Among traditional IRA owners, 5.2 percent contributed, while 24.0 percent of those owning a Roth contributed to it during 2010.
- Of those individuals contributing to an IRA, 43.5 percent contributed the maximum amount. Of those contributing to a traditional IRA, 48.7 percent maxed out their contribution, while 39.3 percent did so with a Roth.
- The average and median account balances increased from $54,863 and $15,756 respectively in 2008 to $67,438 and $17,863 in 2010. This represents an increase of 22.9 percent in the average account balance and 13.4 percent in the median balance. The total individual balances also increased for both the average (32.2 percent) and the median (26.2 percent).
- The average and median rollover amounts were $69,012 and $17,614 respectively, compared with the average contribution of $3,335.
Retirement Income Adequacy for Boomers and Gen Xers: Evidence from the 2012 EBRI Retirement Security Projection Model and Trends in Employment-Based Coverage Among Workers, and Access to Coverage Among Uninsured Workers, 1995-2011
Retirement Income Adequacy for Boomers and Gen Xers: Evidence from the 2012 EBRI Retirement Security Projection Model and Trends in Employment-Based Coverage Among Workers, and Access to Coverage Among Uninsured Workers, 1995-2011
Source: Employee Benefit Research Institute
Retirement Income Adequacy for Boomers and Gen Xers: Evidence from the 2012 EBRI Retirement Security Projection Model®
- EBRI’s updated 2012 Retirement Security Projection Model® finds that for Early Baby Boomers (individuals born between 1948–1954), Late Baby Boomers (born between 1955–1964) and Generation Xers (born between 1965–1974), roughly 44 percent of the simulated lifepaths were projected to lack adequate retirement income for basic retirement expenses plus uninsured health care costs.
- These “at-risk” levels are some 5–8 percentage points LOWER than what was found in 2003, largely due to the growing adoption of automatic enrollment by 401(k) plan sponsors.
- Eligibility for a workplace defined contribution retirement plan has a significant positive impact on “at risk” levels.
- The aggregate retirement income deficit number, taking into account current Social Security retirement benefits and the assumption that net housing equity is utilized “as needed,” is currently estimated to be $4.3 trillion for all Baby Boomers and Gen Xers.
Trends in Employment-Based Coverage Among Workers, and Access to Coverage Among Uninsured Workers, 1995-2011
- Between December 2007–August 2009, the percentage of workers with employment-based coverage in their own name fell from 60.4 percent to 55.9 percent, recovering to 56.5 percent by December 2009. However, by April 2011, the percentage of workers with employment-based coverage had slipped back to 55.8 percent.
- Most uninsured workers reported that they did not have coverage because of cost: anywhere from 70 percent to 90 percent over the December 1995–July 2011 period.
- Uninsured workers reporting that they were not offered employment-based health benefits totaled roughly 40 percent from the mid-1990s through 2003, reaching 23 percent in mid-2011.
New From the GAO
New GAO Reports, Testimony, Presentation
Source: Government Accountability Office
+ Reports
1. Streamlining Government: Questions to Consider When Evaluating Proposals to Consolidate Physical Infrastructure and Management Functions. GAO-12-542, May 23.
http://www.gao.gov/products/GAO-12-542
Highlights – http://www.gao.gov/assets/600/591085.pdf
2. VA Dialysis Pilot: Increased Attention to Planning, Implementation, and Performance Measurement Needed to Help Achieve Goals. GAO-12-584, May 23.
http://www.gao.gov/products/GAO-12-584
Highlights – http://www.gao.gov/assets/600/591072.pdf
3. 401(k) Plans: Increased Educational Outreach and Broader Oversight May Help Reduce Plan Fees. GAO-12-325, April 24.
http://www.gao.gov/products/GAO-12-325
Highlights – http://www.gao.gov/assets/600/590360.pdf
+ Related Product
401(k) PLANS: Survey of 401(k) Plan Sponsors on Fees (GAO-12-550SP, April 2012), an E-supplement to GAO-12-325. GAO-12-550SP, April 24.
http://www.gao.gov/products/GAO-12-550SP
+ Testimony
1. Military Disability System: Preliminary Observations on Efforts to Improve Performance, by Daniel Bertoni, director, education, workforce, and income security, before the Senate Committee on Veterans’ Affairs. GAO-12-718T, May 23.
http://www.gao.gov/products/GAO-12-718T
Highlights – http://www.gao.gov/assets/600/591062.pdf
+ Presentation by the Comptroller General
1. Public Service: The Chance to Remake Our World, by Gene L. Dodaro, Comptroller General of the United States before the Frank Batten School of Leadership and Public Policy, University of Virginia in Charlottesville, Virgina. GAO-12-787CG, May 20.
http://www.gao.gov/products/GAO-12-787CG
Should You Buy an Annuity From Social Security
The brief’s key findings are:
- Households now retiring need to transform their 401(k) and IRA savings into retirement income.
- One way is to delay claiming Social Security to increase their monthly benefit, using savings to pay current expenses while they wait.
- In effect, they are buying an annuity from Social Security: The savings used is the “price” and the increase in their monthly benefit the annuity income it “buys.
- ”Buying an annuity from Social Security is generally the best deal in town, especially in today’s low interest-rate environment.
2012 Investment Company Fact Book
ICI’s annual compilation—our fifty-second edition—reports on retirement assets, characteristics of mutual fund owners, use of index funds, and other trends.
Germany — The Prospects of the Baby Boomers: Methodological Challenges in Projecting the Lives of an Aging Cohort
In most industrialized countries, the work and family patterns of the baby boomers characterized by more heterogeneous working careers and less stable family lives set them apart from preceding cohorts. Thus, it is of crucial importance to understand how these different work and family lives are linked to the boomers’ prospective material well-being as they retire. This paper presents a new and unique matching-based approach for the projection of the life courses of German baby boomers, called the LAW-Life Projection Model. Basis for the projection are data from 27 waves of the German Socio-Economic Panel linked with administrative pension records from the German Statutory Pension Insurance that cover lifecycle pension-relevant earnings. Unlike model-based micro simulations that age the data year by year our matching-based projection uses sequences from older birth cohorts to complete the life-courses of statistically similar baby boomers through to retirement. An advantage of this approach is to coherently project the work-life and family trajectories as well as lifecycle earnings. The authors present a benchmark analysis to assess the validity and accuracy of the projection. For this purpose, they cut a significant portion of already lived lives and test different combinations of matching algorithms and donor pool specifications to identify the combination that produces the best fit be-tween previously cut but observed and projected life-course information. Exploiting the advantages of the projected data, the authors compare the returns to education – measured in terms of pension entitlements – across cohorts. The results indicate that within cohorts, differences between individuals with low and high educational attainment increase over time for men and women in East and West Germany. East German boomer women with low educational attainment face the most substantial losses in pension entitlements that put them at a high risk of being poor as they retire.
More Americans Entering Poverty as They Age
More Americans Entering Poverty as They Age (PDF)
Source: Employee Benefit Research Institute
Between 2005–2009, the rate of poverty among American seniors rose as they aged, as did the number of new entrants into poverty, according to a new report by the nonpartisan Employee Benefit Research Institute (EBRI).
The EBRI report found that poverty rates fell in the first half of the last decade for almost all age groups of older Americans (age 50 or older), though they increased since 2005 for every age group.
Poverty rates, as defined by U.S. Census poverty thresholds, were highest for the oldest of the elderly. Almost 15 percent of those older than age 85 were in poverty in 2009, compared with approximately 10.5 percent of those older than 65, EBRI found. Additionally, in 2009, 6 percent of those age 85 older were new entrants in poverty.
Several factors account for the growing rate of poverty among the elderly, according to Sudipto Banerjee, EBRI research associate and author of the report. “As people age, personal savings and pension account balances are depleted, and as people age, their medical expenditures tend to increase,” Banerjee said.
“Also, the rising poverty rates noted correspond to the two economic recessions that occurred during the last decade.”
+ Full Report (PDF)
Don’t take a lifestyle cut in retirement
Don’t take a lifestyle cut in retirement
CRS — Pension Benefit Guaranty Corporation (PBGC): A Fact Sheet
Pension Benefit Guaranty Corporation (PBGC): A Fact Sheet (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
The Pension Benefit Guaranty Corporation (PBGC) is a federal government agency established in 1974 by the Employee Retirement Income Security Act (ERISA; P.L. 93-406). It was created to protect the pensions of participants and beneficiaries covered by private sector, defined benefit (DB) plans. These pension plans provide a specified monthly benefit at retirement, usually either a percentage of salary or a flat dollar amount multiplied by years of service. Defined contribution plans, such as §401(k) plans, are not insured. The PBGC is chaired by the Secretary of Labor, with the Secretaries of the Treasury and Commerce serving as board members.
The PBGC runs two distinct insurance programs for single-employer and multiemployer plans. Multiemployer plans are collectively bargained plans to which more than one company makes contributions. PBGC maintains separate reserve funds for each program. In FY2011, the PBGC insured about 27,066 DB pension plans covering 44.2 million people. The PBGC paid or owed benefits to 1.5 million people and took in 152 newly terminated pension plans. A firm must be in financial distress to end an underfunded plan. Most workers in single-employer plans taken over by PBGC receive the full benefit earned at the time of termination, but the ceiling on multiemployer plan benefits that could be guaranteed has left almost all of these retirees without full benefit protection.
In the 111th Congress, H.R. 3962, the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (P.L. 111-192) provided defined benefit pension plans sponsors some relief from funding requirements. In the 112th Congress, an amendment offered by Senate Majority Leader Harry Reid to S. 1813, Moving Ahead for Progress in the 21st Century (MAP- 21), contains provisions that would address the use of excess defined benefit pension plan assets and the interest rates that defined benefit plans use to value plan liabilities.
New From the GAO
New GAO ReportsSource: Government Accountability Office
1. Medicare Advantage: Quality Bonus Payment Demonstration Undermined by High Estimated Costs and Design Shortcomings. GAO-12-409R, March 21.
http://www.gao.gov/products/GAO-12-409R
2. Defined Contribution Plans: Approaches in Other Countries Offer Beneficial Strategies in Several Areas. GAO-12-328, April 23.
http://www.gao.gov/products/GAO-12-328
Highlights – http://www.gao.gov/assets/590/589542.pdf
3. Export Controls: U.S. Agencies Need to Assess Control List Reform’s Impact on Compliance Activities. GAO-12-613, April 23.
http://www.gao.gov/products/GAO-12-613
Highlights – http://www.gao.gov/assets/600/590288.pdf
4. Defense Biometrics: Additional Training for Leaders and More Timely Transmission of Data Could Enhance the Use of Biometrics in Afghanistan. GAO-12-442, April 23.
http://www.gao.gov/products/GAO-12-442
Highlights – http://www.gao.gov/assets/600/590312.pdf
5. Medicare Program Integrity: CMS Continues Efforts to Strengthen the Screening of Providers and Suppliers. GAO-12-351, April 23.
http://www.gao.gov/products/GAO-12-351
Highlights – http://www.gao.gov/assets/600/590007.pdf
Social Security — Great Recession-Induced Early Claimers: Who Are They? How Much Do They Lose?
During the Great Recession, more older workers have claimed Social Security benefits early. This paper addresses two important policy questions: Who are these early claimers? How much retirement income have they lost as a result of claiming early? Using the Health and Retirement Study (HRS) we estimate a discrete-time hazard model that makes claiming Social Security benefits a function of age, personal characteristics, and the national unemployment rate. We project that high unemployment rates during the Great Recession led to a 5-percentage-point increase in the probability of claiming early relative to a less severe recession such as the 2001-2003 downturn, and this increase was nearly uniform across socioeconomic groups. Our estimates also suggest that while the Great Recession did impact the claiming decision, it did not cause a dramatic change in benefits. “Great Recession Claimers” – those whom we simulate were likely to claim early during the Great Recession but would not have in a milder downturn – filed for Social Security only 6 months earlier, on average, than they would have in a minor recession. This modest change in timing reduced their monthly Social Security benefit checks by $56, or 4.6 percent of average monthly benefits, and the Social Security replacement rate fell by 1.7 percentage points relative to a more typical recession. The benefit reduction resulted from the combined effect of the actuarial reduction for early claiming and the foregone opportunity to continue working and increase the wage base used for calculating benefits.
+ Full Paper (PDF)
How Important Is Asset Allocation To Financial Security In Retirement?
Financial advice tends to focus on financial assets, but other levers may be more important for most households. This paper proceeds in three stages. The first section reports a simple Excel spreadsheet exercise that provides a stylized example of the tradeoff between returns and time spent in the labor force. The second section uses data from the Health and Retirement Study (HRS) on pre-retirees aged 51-64 to see how the gap between retirement needs and retirement resources is affected by working longer, taking out a reverse mortgage, controlling spending, and shifting all assets to equities with no risk. The third section uses a simple dynamic programming model to calculate a risk-adjusted measure of the value for the average household of moving from a typical conservative portfolio to an optimal portfolio. The answer from all three exercises is the same: the focus on asset allocation is misplaced.
How Can Employers Encourage Young Workers to Save for Retirement?
- One reason young workers don’t save for retirement is that the event is so far off.
- An experiment to boost their saving tested different ads:
- abstract or concrete wording (“why you should save more now” vs. “how you can save more now”);
- and a short- or long-term savings goal (“how much to save from each paycheck” vs. “how much to save over your lifetime”).
- The most effective ads paired abstract wording with a long-term goal and concrete wording with a short-term goal.
- Therefore, communications designed to spur saving by young workers should match the framing of the message to the time horizon of the savings milestone.
Transitioning into Retirement: The MetLife Study of Baby Boomers at 65
Despite the popular belief that Baby Boomers will continue to work well past the traditional retirement age of 65, those born in 1946 are retiring in droves, according to Transitioning into Retirement: The MetLife Study of Baby Boomers at 65. This study is a follow–up to the 2008 MetLife Mature Market Institute study, Boomer Bookends: Insights into the Oldest and Youngest Boomers (released in 2009), which looked at the same segment of Boomers at age 62 and includes 450 of the same interview subjects from the original study.The study reports that 59% of the first Boomers to turn 65 are at least partially retired – 45% are completely retired and 14% are retired, but working part-time. Of those still working, 37% say they’ll retire in the next year and on average plan to do so by the time they’re 68. Half (51%) of those who are retired say they retired earlier than they had expected. Of those who retired early, four-in-ten say they did so for health reasons. The majority (85%) of respondents consider themselves healthy, and almost all (96%) retirees say they like retirement at least somewhat. Seven-in-ten (70%) like it a lot.Almost two-thirds, 63% of respondents, are already collecting Social Security benefits, and on average began doing so at the age of 63, defying the conventional wisdom that people would choose to wait to receive benefits until a later age in order to receive a higher payout. Among those in the survey, just over 60% are confident that the Social Security system will be able to provide adequate benefits for their lifetime.Regarding the attitude of these respondents, the data shows that 43% of those polled are optimistic about the future. Of the 19% who are pessimistic about what’s ahead, 49% fault the government and 21% blame the economy. The 65-year-old Boomers do not consider themselves old; on average they won’t consider themselves to be old until they’re age 79, a year older than reported in 2007.
+ Full Report (PDF)
Modifying the Federal Tax Treatment of 401(k) Plan Contributions: Projected Impact on Participant Account Balances and Trends in Health Coverage for Part-Time Workers
+ Modifying the Federal Tax Treatment of 401(k) Plan Contributions: Projected Impact on Participant Account Balances
- Analyses of recent proposals to change the tax preferences for employment-based 401(k) retirement programs have often assumed status quo in plan design (by plan sponsors) and contribution flows (by both individual participants and employers) in response to those changes.
- Surveys of both individual participants and plan sponsors suggest, however, that some would change—and in many of those cases, reduce—their contributions. Recent surveys of plan sponsors also suggest that not only would some matching contributions be changed in response, but that some employers would cease offering these retirement plans altogether.
- Smaller employers were more likely to respond negatively to the proposed changes than larger employers.
- EBRI baseline analysis indicates that plan-sponsor modifications, combined with individual participant reactions, would result in an average percentage reduction in 401(k) balances of between 6-22 percent at Social Security normal retirement age for workers currently ages 26-35.
- These responses are strongly tied to plan size; EBRI baseline simulations show that 401(k) plans with less than $10 million in assets would experience average reductions in participant balances at retirement age of between 23-40 percent (depending on plan size and income quartile) for workers currently ages 26-35.
+ Trends in Health Coverage for Part-Time Workers
- One of the concerns about enactment of the Patient Protection and Affordable Care Act (PPACA) in 2010 is that the law’s health coverage mandate for full-time workers (for employers with 50 or more workers) will cause cutbacks in coverage to part-time workers (in order to control costs) or an increase in the use of part-time workers.
- The recent recession has already resulted in an increased use of part-time workers, fewer employers are offering health coverage to part-time workers, and there has been a slight drop in the percentage of part-time workers with coverage from their own employer. While since 1999, there has been no clear trend away from offering coverage to part-time workers either among small or large employers, between 2009 and 2011 the percentage of small employers offering health coverage to part-time workers fell from 30 percent to 15 percent.
Money Across Generations II study
Money Across Generations II study
Source: Ameriprise
Our new study reveals that families today are as uncomfortable talking about finances, healthcare and retirement as they are talking about family issues, religion and politics.
+ Full Report (PDF)
Some related “Conversation Guides” are also available for download here (PDFs).
