Is There a Future for Retirement?
Employee Benefit Research Institute (EBRI)
September 1, 2011
EBRI Notes, Vol. 32, No. 9, September 2011
This paper summarizes the presentations and discussions at the Employee Benefit Research Institute’s May 12, 2011, policy forum, on the topic: “Is There a Future for Retirement?” This was EBRI’s 68th policy forum held in Washington, DC, and was attended by about 120 policy and professional experts. The EBRI Retirement Readiness Rating™ finds that many individuals will need to keep working past normal retirement age in order to have sufficient resources to pay the bills; said another way, they have insufficient resources, even including Social Security and Medicare, to pay their bills. Many articles and papers have been written in recent years suggesting that working an extra two or three years would solve the problem for most people, but this has not been well documented or quantified. But will it be enough if workers simply stay on the job just a few extra years? New EBRI research presented at this May 2011 policy forum addressed that question with comprehensive data from its Retirement Security Projection Model.® These findings, presented by EBRI’s research director and published in the June 2011 EBRI Issue Brief, show that if Baby Boomers and Gen Xers delay their retirement past the age of 65, many of them still would not have adequate income to cover their basic retirement expenses and uninsured health care costs -- especially low-income workers. Even if workers delay their retirement age into their 70s, there is still a chance the household will be “at risk” of running short of money in retirement. A speaker from Callan Associates presented research showing the impact of automatic features in 401(k) plans on retirement income adequacy, as well as data on the impact of “leakage” of savings in 401(k) plans (such as through cash-outs at job change, hardship withdrawals, and loans). Other speakers suggested that retirement plan sponsors should provide workers with more help in investing, since many workers will not be able to save more money or retire later, and that workers could improve their financial security by better asset management -- in particular by cutting debt and using guaranteed income products such as life annuities to manage longevity risk. A variety of speakers touched on how a substantial number of Americans will not be able to work longer than traditional retirement age even if they want to because of layoffs, mergers, or poor health.
The PDF for the above title, published in the September 2011 issue of EBRI Notes, also contains the fulltext of another September 2011 EBRI Notes article abstracted on SSRN: “2011 Health Confidence Survey: Most Americans Unfamiliar With Key Aspect of Health Reform.”
Number of Pages in PDF File: 24
Keywords: Aged, Defined contribution plans, Retirement, Retirement age, Retirement income, Work
JEL Classification: D31, D91, J14, J26, J33
Date posted: September 28, 2011