The ‘Catch’ in the Saver’s Match

 Of all the promising provisions in the SECURE 2.0 Act of 2022, one of the most expensive (as the federal government does math, anyway) is likely to be one of the most challenging to implement.

It’s not effective till 2027, so there’s still some time to figure it out—but I’m talking about the new Saver’s Match—a significantly retooled and expanded version of the Saver’s Credit (which is more properly referred to, at least by the IRS, as “Retirement Savings Contributions Credit”). 

As with the precursor Saver’s Credit, the Saver’s Match is focused on increasing the savings of lower-income workers by—in addition to what an employer may match—making a matching contribution from the federal government. The match has a maximum value of $1,000 at a rate of $0.50 per dollar contributed by a worker, up to $2,000 annually. 

The Employee Benefit Research Institute (EBRI) has estimated (from tabulations of tax filers with W-2 (wage) income) that 69 million had incomes eligible for the Saver’s Match. That would, of course, be dependent on how many of those contributed to a qualified retirement plan (employment-based or IRA), and there EBRI has estimated[i] that it might apply to 21.9 million individuals—compared with the 5.7% of taxpayers who claimed the Saver’s Credit in 2021.

Perhaps the most significant enhancement is that—unlike the Saver’s Credit—you don’t have to owe taxes in order to be eligible. Instead, the Saver’s Match is a refundable tax credit—and that alone is expected to dramatically increase the number of individuals taking advantage.

In addition, while the Saver’s Credit simply offset taxes owed (and thus put no new money in the worker’s hands), the Saver’s Match will actually be deposited to a qualified retirement account—employment-based or IRA. Now, there are some challenges ahead on that front—not the least of which involve the reporting and depositing of the match—but we’ll come back to that.

Finally, the Saver’s Match itself is more generous,[ii] both in amounts and eligible income brackets than the Saver’s Credit—which bodes well for more people taking advantage.

The Challenges

You don’t have to think long about the mechanics involved to find yourself saying “how in the world are ‘they’ going to do that?” Think about the reporting of the contributions—the federal government looking to confirm an account where the match can be deposited—the recordkeeping of this new match (not to mention tracking it to the point of distribution)—oh, and what changes might occur in location/retirement accounts between the point the contributions are reported and when the funds from the federal government might be available.

Beyond those obvious obstacles, a recent report from Pew outlines some legal limitations worth keeping in mind:

Roth exclusion. While Roth contributions qualify for the match, the match money cannot be deposited into a Roth IRA or plan account (it will be considered a pre-tax traditional contribution that will be taxed as ordinary income when withdrawn). While this might miss a lot of employment-based plan savers, those in state-run IRAs will need an alternative account for this deposit.

Employment-based plans don’t have to accept the contributions. While this might be good news for recordkeepers (or plan sponsors) who don’t want to mess with these deposits, it would require the individual to establish an account somewhere to accept it (likely an IRA).

Claw-back provision. The original Saver’s Credit had an offset for distributions[iii]—and so does the Saver’s Match. Eligible individuals who take early distributions from their account that exceed the amount of the saver’s matching contribution could be subject to additional tax, and considering these individuals are lower income, that might well be the case.

ABLE account savings are not eligible—though they were for the Saver’s Credit.

Those aren’t exactly “catches”—they are simply conditions regarding the Saver’s Match that are known and must be part of the planning and education. In fact, the biggest challenge of all may well be education. Surveys—notably from the Transamerica Institute—have routinely found that less than half of those eligible for the Saver’s Credit are aware of it. On the other hand, SECURE 2.0 requires[iv] the U.S. Department of the Treasury to promote the Saver’s Match.

And, assuming it all comes together, it could mean millions—perhaps billions—in new retirement savings. And that would be the biggest “catch” of all.

Fingers crossed.

 - Nevin E. Adams, JD

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[i] EBRI has also cautioned that this might be a conservative estimate, as it was based on W-2 compensation data only, and did not contemplate additions due to new long-term part-time eligibility rules, or contributions to state-run IRAs, not to mention the expanded incentives for new plan formation and the impact of automatic enrollment adoption by those plans, per SECURE 2.0 provisions.   

[ii] Savers with modified AGIs below $20,500 ($41,000 for married filing jointly) will qualify for a 50% federal match on up to $2,000 in retirement savings—that is, a maximum match of $1,000. This income threshold will be adjusted for the cost of living for years after 2027. Those who earn up to $15,000 more than this threshold ($30,000 more for married couples filing jointly) will qualify for a reduced match.

[iii] The amount of any contribution eligible for the credit is reduced by distributions received by the taxpayer (or by the taxpayer’s spouse if the taxpayer files a joint return with the spouse) from any retirement plan or IRA to which eligible contributions can be made during the taxable year for which the credit is claimed, during the two taxable years prior to the year the credit is claimed, and during the period after the end of the taxable year for which the credit is claimed and prior to the due date for filing the taxpayer’s return for the year. Distributions that are rolled over to another retirement plan or IRA do not affect the credit.

[iv] It further requires that Treasury “shall, not later than July 1, 2026, provide a report to Congress summarizing anticipated promotion efforts,” including “a description of plans for the development and distribution of digital and print materials; the translation of such materials into the 10 most commonly spoken languages after English as determined by data from the U.S. Census Bureau, American Community Survey; and communicating the adverse consequences of early withdrawal from an applicable retirement savings vehicle to which a matching contribution has been paid.”

No ‘Magic’ in These 401(k) Retirement Numbers

 Last week, a new report claimed to find a big jump in a so-called “magic” number for retirement, based on what survey respondents said they thought they’d need. As though they’d know.

It garnered quite a bit of coverage, including an article in The Wall Street Journal (and a comment from none other than Teresa Ghilarducci). While the “magic” number of $1.46 million didn’t seem astronomical (Professor Ghilarducci even commented that people often OVER-estimate their needs), that number jumped dramatically from $1.27 million a year ago—something the authors attributed to concerns about inflation.

There are many problems with reports like this—none of which the breathless reporting of the conclusions acknowledged:

(1) It’s an average—while we get some breakdown on age brackets, we know nothing about their incomes, where they live, their health, etc.  What someone needs (or thinks they need) living in New York City is (or should be) considerably different from the projections of someone living in Dubuque, Iowa.   

(2) It’s based on what people “think” (who have probably not given this any real thought).

(3) It’s surveying completely different groups of people a year apart, so drawing a trendline is a predictable, but dubious reality.

The good news is—this time—most industry “voices” pushed back on this “magic” number, albeit for different reasons. Mostly they cast shade on the notion that any one number would be right for everyone, and/or they preferred to rely on a percent of pay gauge. But those struck me as “nibbles” around the edge of the report; valid criticisms to be sure, but more about the result than the process used to produce it. 

Meanwhile, stories like this serve mostly to fuel the concerns that responsible human beings already have as they try to look ahead to a future decades ahead in a time of tremendous uncertainty. If they weren’t nervous before they saw these headlines, they surely are afterwards.

Now, those of us in this industry see—and produce—reports like this all the time. We look at those gaps (even the misperceived ones) as a challenge, an opportunity, a goal to strive for, a gap to close.  And thank goodness we do.

But while I wouldn’t for a moment suggest that those gaps don’t exist for some, nor would I advocate obscuring those realities, it would be naïve to think that those who want to shut down or “defund” private retirement plans don’t see these types of reports as an admission of failure, if not guilt. 

There are plenty of good stories to tell—and every day there’s an individual (perhaps many individuals) who confidently step off into retirement, buttressed by a history of consistent saving and encouraged by the support and guidance of a qualified retirement plan advisor. It’s a story that nobody seems interested in covering, but one in fairness that we don’t spend much time sharing, either.

I’d ask today that, in the future, you pause before sharing this kind of “the sky is falling” headline with your networks. Let’s start sharing the realities of the plans you work with, the retirement successes of the workers you support, the impact that holistic focus on financial wellness is having on the finances and emotional stress of those you serve… 

It may not be “magic”—but it sure matters.

- Nevin E. Adams, JD

A Tough Question

I’m rarely at a loss for words, but I was recently asked a question that gave me …pause.

It was a simple question really—John Sullivan and I were being interviewed on the 401(k) Specialist podcast—and Brian Anderson asked “which session are you most looking forward to at the NAPA 401(k) Summit?”

I was only too happy to defer to John while I gave the question some thought. But in truth, it was a little bit like asking a parent to name their favorite child.  Now, there are some sessions I am more interested in than others—but to pick one? 

Well, I just couldn’t do it—and fortunately Brian didn’t try to box me in (I did allude to a specific affinity for the LIVE Nevin & Fred podcast session, however).  

In fact, we do approach our content a bit differently than most, I think. While it’s gotten to be pretty common for events to boast of the pedigree of their steering bodies, many, perhaps most—are essentially no more than figureheads to the actual agenda development. They’re a group to whom the folks doing the “real” work of planning, structuring and implementing the event keep updated, mostly for a sense of validation and the occasional course correct. Oh, and so that the event can “show off” the luminaries that have agreed to lend their name (and face) to promote its bona fides.

Your Summit Steering committee has spent nearly a year putting this all together—and leveraging YOUR input on topics, each has aligned themselves with a specific workshop—literally “owning” that session. That means fleshing out the focus, lining up speakers/panelists, developing a core list of key takeaways, conducting trial runs/practices, and ultimately making sure that all the materials are in on time—and that on “game day” everybody shows up and does their part. As a result, I can pretty much promise you that you won’t be able to attend every session you’d like. In fact, I’d be surprised if you don’t find yourself torn between multiple sessions all going on at the same time throughout the event.

There are, of course, a myriad of ways to build and structure events—note here that I haven’t said a word about our keynotes, or even NAPA After Dark (that has in just a few short years emerged as the pinnacle of industry networking events). But, aside from the practical information, valuable insights, vibrant networking—and yes, world-class entertainment—it’s worth remembering that among all the (other) things that set the NAPA 401(k) Summit apart—unlike every other advisor conference out there—your NAPA 401(k) Summit registration helps support the activities of NAPA—your advocacy, information and education organization—not the bottom line of some corporate media organization or some private equity firm. NAPA not only informs and educates—it literally is your voice with regulatory agencies and legislative bodies both here in the nation’s capital—and across the nation.

Indeed, that voice is particularly essential this year, as the attacks—both overt and the insidious passive-aggressive types—are out and about with an unusual vigor in recent months. This being an election year—and one that seems particularly fraught with concerns—makes the current environment all the more precarious. It’s not hyperbole to suggest that the fate of the 401(k) could be in the balance.

So, if you’re one of the record 2,800+ arriving in Nashville next week—please lend your voice, support the ARA PAC, and get ready to leave Nashville full of energy, ideas, and a renewed fervor to make a difference. 

While you’re there, please stop me (I’ll likely be running) and say “hey!” Make sure to thank the Summit Steering committee when you see them—and the ARA/NAPA conferences staff as well—cause something this big doesn’t even get off the ground without a LOT of careful/thoughtful planning and on-site execution! 

And if you haven’t (yet) applied to be part of the NAPA DC Fly-In Forum—well, today would be a good day to do so before it fills up as well!

- Nevin E. Adams, JD 

Is the 401(k) Really a ‘Horrible’ Retirement Plan?

A recent “news” post about a blog post finds some curious “faults” with the 401(k).

The news item carried the provocative title “‘Rich Dad’ Robert Kiyosaki Reveals Why the 401(k) Is a ‘Horrible’ Retirement Plan.” It originally ran on GoBankingRates.com, but was subsequently picked up in syndication on Yahoo Finance (at least). For the uninitiated, Robert Kiyosaki is one of those “I’ll help you get rich the way I did” types, providing that road map via books (notably “Rich Dad, Poor Dad”) and seminars. He offers comparisons to decisions made by his dad (poor dad) in contrast to those of the father of his best friend (rich dad). 

Suffice it to say that his dad worked hard and saved the old-fashioned way—which is NOT his advice to you. That’s included previous pearls of wisdom like “Why Saving Money is the Wrong Way to Prepare for Retirement.” Apparently rather than saving for retirement, we’re supposed to “look for an investment that will pay for your desired standard of living. Make your money work for you, not the other way around.”

What could go wrong?

All that said, the author of the GoBankingRates article has apparently just stumbled across Rich Dad Robert Kiyosaki’s blog, from which they draw most of this nonsense. Those ideas are (apparently) not new—the blogs draw back to a blog post last updated in August 2023 titled “The 401(k): Robbing Your Retirement Plan for Over 40 Years.”        

Now, according to the writer at GoBankingRate (and supported by posts on Rich Dad) Rich Dad’s[i] beefs with the 401(k) are the usual assortment touted by personal financial writers; high fees (more on that in a minute) and “low control.” On the latter point, such pundits always bemoan the limits of a 401(k) menu populated with fund offerings other than what they’d be glad to recommend (for a fee—Rich Dad has an affinity for real estate). He also doesn’t like the restrictions on withdrawals (including the penalties for early withdrawal)—and he’s bothered by the lack of insurance to insulate against a market crash. 

Rich Dad also sees as a fault the fact that there are limits on how much you can put into a 401(k)—as though those limits preclude other investments. Oddly, he says that if you want to set aside more than that, you’ll have to pay taxes and penalties—which clearly suggests that he (or the GoBankingRate author who restated his position) hasn’t a clue how 401(k)s and those contribution limits actually work (and there’s nary a word about catch-up contributions).

He also doesn’t like the taxes you’ll (eventually) have to pay—oh, and he sees the employer match as “false security,” arguing that if your employer wasn’t providing the match they’d have to give you the same amount in pay (to compensate for the lack of the 401(k) offering). He also says you have no control over the funds from the employer match, by which one can only assume that he means we can’t invest those funds how he would suggest, since in my experience the investment of employer matching funds is routinely left to participant direction.

All that said, he puts forth assumptions about fees that seem wildly out of line with reality—or at least what industry surveys and anecdotal evidence of the real world suggest. In his world, mutual funds usually take 2%—that’s 200 basis points—of your investments. He at least infers that that is in addition to “transaction fees, legal fees and bookkeeping fees”—which in MY mutual fund world are all included in the fund’s fee structure—and still come in well below 2%. 

Now, I’m not saying you couldn’t find a 401(k) out there that charges that much—my point would be that it wouldn’t be considered “the norm,” and to suggest otherwise is stretching a point, to put it mildly (Morningstar’s John Rekenthaler takes on this assertion quite handily here. He also makes several valid points about the state of financial journalism today, which are well worth bearing in mind given the circulation of pieces like this). 

Not that Kiyosaki is totally opposed to 401(k)s. In fact, he comments that “being forced into a 401(k) probably isn’t a bad thing for most people” … and goes on to note “because most people have little-to-no financial education and wouldn’t know what to do with the extra[ii] money other than save it or spend it.” 

Everybody else? Well, I guess they’re spending it on a Rich Dad, Poor Dad seminar. Now there’s a horrible retirement “plan.”     

 - Nevin E. Adams, JD

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[i] As noted above, Kiyosaki isn’t the actual “rich dad.” That refers to his best friend’s father.

[ii] That’s the extra money an employer that doesn’t offer a 401(k) would have to pay you to get you to work for them.  

Do Roth and 401(k) Pre-Tax Holders Really Spend Differently?

An interesting—and somewhat counterintuitive—report came out last week, one that cast doubt on the “common wisdom” regarding Roth versus traditional pre-tax savings.

The assumption underlying the research[i] was that those who had not yet paid taxes on their savings (the traditional pre-tax savings) would be hesitant to tap into those savings and trigger taxes, certainly more so that individuals that had already paid those taxes. Instead, the research suggested that the opposite occurred; that individuals who had saved on a pre-tax basis actually withdrew more/sooner—but with a twist. 

This they hailed as good news. They noted that the research suggests investing in a CT (current-taxed, or Roth) plan could help ease concerns about outliving funds—because they spend at a lower rate (though they saw this as a negative for those who saved on a deferred tax (DT) basis).  They even managed to find a silver lining in the “cloud” of faster spending by the pre-tax crowd because those individuals appeared to be trying to adjust for the effect of taxes (with the caveat “despite our findings that they do not appear to adjust sufficiently, if at all”). And they saw as a positive this report’s contribution to the “accounting literature exploring the effectiveness and consequences of incentivizing behaviors through tax policy, by highlighting how past decisions motivated by taxes (e.g., retirement plan type) may continue to affect one’s quality of life long into the future.”

A few words of caution would seem to be in order, however. This wasn’t based on the patterns of actual people spending their actual money in the real world. Rather, and to their credit, they constructed a laboratory environment of sorts; they selected a group of volunteers, gave them certain criteria—basically a role they would “play” in the experiment—and set out a spending scenario. They then had them read about various spending choices—and, well—recorded how the individuals chose.

As for their conclusions, when you probe into the results more carefully, what you see is that even though those who had pre-tax accounts ostensibly feel the “pain” of taxes due on their retirement withdrawals—and that appeared to restrict their spending—it seemed to be offset by another reality. That, for reasons not understood/explained, those same individuals appeared to relish the expected benefits of consumption more than Roth holders. Said another way, their “reservations”— the cognizance of taxes—didn’t seem to constrain their spending because they were (more) enamored of the benefits of spending. Indeed, the researchers commented that those with “equivalent nominal balances” actually spent at the same rate.

I’ll just comment that it’s an interesting premise—and that the test environment created struck me as detailed and complex to map out, establish and execute. That said, I would be hesitant to draw any substantive conclusions on actual human behavior from this analysis. To me, all it seemed to “prove” is that people selected for an experiment tend to spend to the perceived “limits” of their hypothetical account, regardless of taxation. It didn’t strike me that Roth holders spent less (as many headlines covering the report suggested), but rather that pre-tax holders spent the same, even though they were going to have to deal with a tax bill at some point (hypothetically, of course).

And that, to me, isn’t a positive thing for Roths so much as it is a cautionary note for pre-tax savers—who may have forgotten that tax deferral is just that.

 - Nevin E. Adams, JD

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[i] How Does Tax Timing Affect Spending in Retirement?  

The 'Luck' of the Irish

 As St. Patrick’s Day approaches, I’m reminded of a trip my younger brother and I made with my grandparents to the Great Smoky Mountains. 

Now, my grandparents had made many trips to that area, but it was a new experience for me and my brother. To this day I remember a hotel that had a pool with a breathtaking view of the mountains, another sitting right on a rushing stream—and some kind of trading post that had a big black bear outside. 

Throughout the trip, my brother and I would try to get a sense of where the next day’s adventures would take us as we followed along in one of those big fold out roadmaps. But in response to our repeated inquiries as to our next stop, my grandfather would demur, saying only that he was relying on “the luck of the Irish” to find us a place to stay for the night. To this day, I’ve no idea if he truly was or not (the Irish in my heritage doesn’t come from his side of the family, but from my grandmother)—but we always found a place to stay for the night—and comfortable, though certainly not luxurious, accommodations, to boot (not always in the first place we pulled in to, however). There’s some disagreement as to whether or not there IS such a thing as the luck of the Irish (more specifically as to whether that’s good or not-so-good luck), but I can’t come up on St. Patrick’s Day without remembering that trip and my grandfather’s reference[i]. 

A New ‘Mission’

That all came back to me some years back when I was driving with my family near the Grand Canyon. We hadn’t planned to be there until the following day, but our plans worked out differently, and we started talking about being AT the Grand Canyon for sunrise, and, in a rare burst of spontaneity, all of a sudden it became something of a “mission.” I remember sharing gleefully with my kids my grandfather’s vacation mantra.  

Well, as it turned out, our commitment to the new “objective” notwithstanding, it took longer to get there than I had thought, and when, sometime after 10 pm, after finding there was “no room at the inn” (literally) at an embarrassing number of places (and this after filtering the ones we called on the way and got the same answer), we began to seriously contemplate the possibility of spending the night in a hotel…parking lot.

Our lack of “planning” made for a chilly night at the Grand Canyon, though we spent it in a camper park, not a hotel parking lot. It was a miserable night, to be sure—SO miserable (it gets very cold in the desert at night) that it made it very easy for us to attain our primary objective—to see the Grand Canyon at sunrise (albeit unbathed and somewhat disheveled)—something we’d almost certainly never done if we’d actually gotten into a warm hotel bed that night. 

My grandfather was a great storyteller, though you couldn’t always tell when he was pulling your leg. As a consequence, I’ve no idea if my grandfather was at all stressed about not finding a motel in the Tennessee foothills the way I was out in the middle of the Arizona desert (in the middle of the night). 

That said, it seems that lots of American workers are heading toward their potential retirements with no real idea as to whether or not there will be suitable accommodations at the end of that journey. While there are—and have long been—plenty of surveys out there that reveal concerns about that possibility, there’s little to suggest that those concerns are motivating action, or even some time spent considering the possibilities. It’s as though they, like my grandfather, are relying on “the luck of the Irish.”

As St. Patrick’s Day approaches, there will be parades, the gathering of four-leaf clovers (which aren’t as rare as you may have been led to believe), and plenty of unnaturally green beverages, not to mention references to leprechauns and their pots of gold. Indeed, tradition says that if you catch a leprechaun, he can be coerced into giving you some gold—but tradition also holds that they’re hard to catch, and even harder to hang on to. 

As one might well imagine, a comfortable retirement without planning and action will be. 

 - Nevin E. Adams, JD

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[i] Apparently, its origins go back to the 1800s here in the U.S., and a preponderance of Irish settlers here that fared well during the California Gold Rush.

A Penchant for Pensions?

  I’m not sure how old I was when I first saw “Night of the Living Dead”—but I have long been intrigued by stories of a zombie apocalypse—where mindless beings inexplicably rise from the dead, with no memory of their past, just a relentless (and apparently insatiable) hunger for…well, “us.”

That is perhaps an unfortunate comparison to last week’s hearing by the Senate Health, Education, Labor and Pensions (HELP) Committee, one ostensibly held to focus on how we were going to stave off the retirement “crisis” by…bringing “back”[i] defined benefit plans.[ii]

There were two fundamental premises underlying the hearing; first that there is, in fact, a retirement crisis, and second, that the restoration of defined benefit plan designs would remedy that situation.  

There remains in many circles (including last week’s hearing) a pervasive sense that the defined contribution system is inferior to the defined benefit approach—a sense that seems driven not by what the latter actually produced in terms of benefits, but in terms of what it promised. Even now, it seems that you have to remind folks that the “less than half” covered by a workplace retirement plan was true even in the “good old days” before the 401(k), at least within the private sector. And when it comes to defined benefit plans, it was significantly less than half.

And while you can (eventually) wrest an acknowledgement from those familiar with the data, almost no one EVER talks about how few of even those covered by those DB plans put in the time required to vest in their full pension (particularly prior to the Tax Reform Act of 1986, which accelerated vesting schedules). Those who demonize the 401(k) are never asked to speak to the “coverage gap” that was actually wider when defined benefit structures were “in vogue,” nor called for an accounting of the shortfall between the actual benefits delivered versus the “promise.” And yet, those 401(k) critics in last week’s hearing—with a straight face—held forth on how much better things would be…if only defined benefit plans would come back.

Don’t get me wrong—defined benefit plans continue to serve a valued societal purpose (not the least of which the income they provide my 93-year-old mother, though given the state’s finances, she remains concerned how long they will last), though they tend to work “better” in the public sector and among unionized workforces, where one’s profession and job tenure tend to be less volatile. That said, it’s not like there was some kind of cataclysmic event that wiped them out overnight in the private sector. Rather, their demise was one of a hundred painful “cuts”—all well-intentioned, of course. 

There were (and are) premiums to provide insurance backing for plans that “fail,” disclosures to try and avoid (unexpected) failures, demands for a full accounting of the potential financial obligations those plans represented for the organizations that sponsor them, and finally a demand that those financials be moved from footnotes to the corporate balance sheet itself. At any number of points along that continuum, one could well understand and appreciate why employers would choose to step away from that burden—and they did. 

Moreover, with few exceptions they were able to do so without opposition from employees—who typically didn’t (and largely still don’t) appreciate the cost or benefit of a promise that won’t come to fruition until years, if not decades, beyond the date they expect to be employed by the firm making that promise. And that ignores a criticism highlighted by several in the hearing—that these programs aren’t always well-managed or funded to provide those promised benefits.         

Yes, a fully funded, fully vested benefit that you’ve paid nothing for is certainly a good thing. Little wonder that a recent survey (by one of those firms represented at the hearing) suggested a massive public clamoring for the alleged panacea of these programs. And considering the plethora of headlines proclaiming the dire straits of today’s retirees, who can be faulted for clinging to a benevolent notion of a simpler time when someone else worried about such things?

All that said, there was little in the way of actual data at the hearing to suggest that a return of DB (certainly at the expense of the 401(k)) would actually resolve the issues. Mostly the witnesses focused on the alleged shortcomings of the current system (albeit with some sharp differences in conclusions, and a brief debate about the different results one gets from actual data versus surveys reliant on what people think in terms of establishing whether or not there is an actual crisis), alongside some optimism that SECURE and SECURE 2.0 had laid the groundwork for potential improvement in coverage, sufficiency and decumulation options. If there was a consensus, it might have been that we need to address the projected shortfalls in Social Security benefits—and, truly, if that isn’t, then we really will be looking at a crisis.

The thing that makes cinematic zombies so terrifying is that there are so many of them—and that they keep getting up and pursuing you no matter how much damage you inflict.[iii] That, and they manage to “convert” more with a simple bite. Let’s face it—a truly serious look at the retirement “crisis” would acknowledge that under traditional vesting definitions and job turnover rates in the private sector, defined benefit designs are, at best, a dubious solution. 

A penchant has been described as an irresistible attraction, as someone having a “penchant” for taking risks. 

A more practical one would be to look at a system that is already in place and working for those with access—and talk about ways to make THAT reality a reality for all.

- Nevin E. Adams, JD

 

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[i] In fairness, there are still defined benefit plans about, even in the private sector—though they are considerably fewer than they were a generation ago, and many are frozen or in termination status. 

[ii] The hearing was titled and you can still listen to a recording of it here, "Taking a Serious Look at the Retirement Crisis in America: What Can We Do to Expand Defined Benefit Pension Plans for Workers."

[iii] Well, except for the occasional well-placed headshot.