2 4 5 3 2010 R efe . r “T eh nce e I In ms p Ap a c ril t o 2010, f Auto th me a ti mo c En derl ow llm ase c no t mp in 4 le 0te 1(ly k) Pl re-a pn as ra o m ne F te uri tu zre ed Re with tire401( menk t )A p cla cu nm du els aiti go n np sa : ra A S me im te urs la tfo ior n T-174 Study Based on Plan Design Modifications of Larg e Plan Sponsors.” EBRI Issue Brief, no. 341 (Employee ® Endnotes sponsors that had adopted automatic-enrollment provisions (VanDerhei, April 2010). A completely Copeland, Craig, a sin the ac ndg Jle fe actual k Va m defau ales i nDerh s app e lt i.co “Tn ro he trib xim De u c ate tio linin n ly g rat $ Ro 1es) 3 le 3 ,0 o that n f 0 Pri 0.v a That o te w De we vfi alu n re e d es Be deno ucce nefi ssfu ttes Pel as th nse io a a nv re Pl erag sul ans t e : o add W f t hh oiti e Is o h ig nal her Appendix: Brief Chronology of EBRI’s Retirement Security Projection Model Responses to questions from Jan. 31, 2013, Senate HELP hearing: Benup efid t Re ated se vaerc rsh ion In sotif tu the te, na Aptiona ril 20l 1mo 0).d el was produced for the May 2010 EBRI policy forum and used in d am efe ou rra nt l rat of sa e v was ings nee 18.4 perc ded at ent. ag e 65 for at-risk single females in that age cohort NOT to Affected, and How.” In Robert L. Clark and Olivia Mitchell, eds., Reorienting Retirement Risk Management. 2001 RSPM grew out of a multi-year project to analyze the future economic well-being of the retired 1 TM “Pension Savings: Are Worker6 s Saving Enough for Retirement? ” the July 2010 Issue Brief (VanDerhei and Copeland, 2010). The EBRI Retirement Readiness Ratings measure the percentage of simulated life paths in retirement that are Oxford University Press for the Pension Research Council, 2010: 122–136. run short of money in retirement. Moreover, 13 percent of these single females would . “Falling Stocks: What Will Happen to Retirees' Incomes? The Worker Perspective,” Presentation for The population at the state level. EBRI and the Milbank Memorial Fund, working with the office of the at risk of inade Bq yu Ja ate c r ke V tire an m D eerh nt in ei, come resear . A hc oh us d eh iro ec ld’tso sr, E imump latelo d lif yee ep at Benef h in re ittir Re em se en at rch is co In nst sid it eu re td e t o be at risk 4. Job changh es av a e nsh d defa ortfall ult s in ex deferces ral r s o est f $ a2 rts 00 . ,000. Economic Crisis of 2008: What Will Happen to Retirees’ Incomes? 2009 APPAM Fall Conference The new model was used to analyze how eligibility for participation in a defined contribution plan VanDerhei, Jg ao cv ke . rno “Allr o or No f Orth egin og n, ? An set Ex out pin anthe ded l Pe ater s 1990s pectiv to e o sn e e Ret if thi ires m s ein tua t Re tion adc in oe uld ss .” be E e BRI No valuate te ds fo , n r othe . 11 s tate. in the baseline version of the model if its aggregate resources in retirement are not sufficient to meet aggregate oo As o EBRI res ne m earch h ight expe as prev ct, there iousl is y d a gr ocum eat en am teo du (N nto o vfe v m ari ber ati2 o0 n1 in the 0) the pr sho orftfall ound valu infes luence for of Senate (November 2 Committ 009). ee on Health, Education, Labor and Pensions impacts retirement income adequacy in September 2010 (VanDerhei, September 2010), and was later The resulting analysis (VanDerhei and Copeland, September 2001) focused primarily on simulated (Employee Benefit Research Institute, November 2012): 11-23. minimum retirement expenditures, defined as a combination of deterministic expenses from the Consumer This document provides responses to questions raised by members of the Senate HELP Committee at these plan desig single n v fe ari m ab ales. les, as How well as e ever, om ne po lo f t yee he beha most vi io m r in po auto rtant -p enr redi oll ct m oent rs o4 f h 01 o( w k) m plu an ch s. used to compute Retirement Savings Shortfalls (RSS) for Baby Boomers and Generation Xers in October retirement wealth with a comparison to ad hoc thresholds for retirement expenditures. Expenditure Survey (as a function of income) as well as some health insurance and out-of-pocket health-related . Testimony. Joint DOL/SEC Public Hearing on Targe t Dates Funds. How Would Target-Date Funds Likely .“ Increasing Default Deferral Rates in Automatic Enrollment 401(k) Plans: The Impact on Retirement Savings their Jan. 31 hearing on retirement savings. short Large fal diff l, if er any, ences the in the pr y will ex op berience is ability of ha thv ein FUTUR g at least E yea 80 rs o perce f elig nt ib o ilfity pre fo -re r par tire ticip men at tion in 2010 (VanDerhei, October 2010a). expenses, plus stochastic expenses from nursing home and home health care (at least until the point such Impact Future 401(k) Contributions? (T-160). June 2009. 2002 SucW ceith ss i the n P a la sn siss ta Wnc ithe Au of to the ma Ka ticn E sa ss c a Ins latura ion.” nc e EBRI No Departme tesnt, , n oEB . 9R (E I w map sl o ay be le e Be to c nre efi at te Re Rs ee tire arc m he Int nsti Rtu ea te d,ine ss a 4 inco 0m 1(e k) rp epl lan aced ( . For e when xamp 4 le 0, 1 1 (k) 7. ba 5 plan ercent ces and of sin IRA ro gle fe llo m vales in thi ers from 4 s gr 01o (k u ) p p w lan ho s at will job no t expenses are picked up by Medicaid). The resources in retirement are assumed to consist of Social Security (status In October testimony before the Senate Health, Education, Labor and Pensions Committee on “The SepR te am ting bes r b2a0s1 e2 d): o1 n 2a -22. full stochastic decumulation model that took into account the household’s longevity ? What is retirement income adequacy? . “The Expec wo cha ted rk n Ig m fo e pa r are an e ct oco f Au m m p to b lo in my a ed er tic spo E with scn aso lSo atirin cial on g o Se a f 44 cur 00 11 (k ity (k) ) Co b pla enefits ntrn ib bet utio) we nw s o e en 2 re n Re fo 0ti 1 u re 3 nm and d, d ent epend t In hc e o t m im in e.” g e o EBRI No they n which reach te s, quo benefits for the baseline version of the simulation); account balances from defined contribution plans; W riso kb , b ply os S t-to reotire l: R m ee tire nt m ine vnt estme (In)nt secris urity k, a in ndAme expric osure a,” the to p mo oted ntia el w lly a sc a us ta esd tro top hic ana nu lyzrs e ing the- ho relme ativ a en d home- o For public policy analysis, EBRI defines adequate retirement income as having the no. 9 (Employee Benefit Research Institute, September 2007): 2–8 p retire lan desig ment n fact age will h ors and ave esh mp olo rtfall yee s in beha exc vio ess r assu of $m 20 p 0tio ,00 n0 s are . In cu osed. ntrast, Fofro e r t xa hm os p e le, w i ith f o n oe ne in divid . u“I al s re Wtire orkim ng e t no t A acco ge 7 u0 n tRea s (IRA llys t) a hen An d/or sw ca er f sh o b r Re alati nre ce m p elan nt In s; an com ne u Ad itiee s o qu r alu cy m ?p ” -EBRI sum d Not istrib es, u n tio o. n8 s (Em from d ploe yf e in ee d 1 importance of employer-provided retirement benefits and Social Security (VanDerhei, October 2010b). health-care risks. Hearing on: financial resources to cover basic expenses plus uninsured medical costs in retirement. benefit plans; andto assu ne nin t h m o e e u s t y sin ea h g equ rs at an au of futu ity (in to re tm h e e a form o li tic gi e bil n ity ro f a ,ll lu the mm ent perc p- pl sum an entag d h isas a trib e with uf tio eat n a u short re t th that au efal po ls in int to th ex m at cati o ess th call e o r f y f$ in esc 2 an 00 cial a,lates 000 a Benefit Research Institute, August 2012): 10–21. . “Measuring Retirement Income Adequacy: Calculati ng Realistic Income Replacement Rates.” EBRI Issue Many other projections overlook, implicitly or explicitly, uninsured medical costs in resources are exhau d wo ro sted rk ps t er’s ). o T h 1 4i3 0 s.0 v 1( e k) p rs erc ion coent. n otrib f thu Th e ti m e oo n p d by erce el is 1 co n p tag erce nstru e d n cted ecr t of c ease to o si m m s t pu ens o lat 7e atio .9 "b pa erc n s ic an ent f " r ne u tall ire or t y m an h en od t se c in w ap come ith s e m 10 p ? lo 1y 9e e 2011 In February the model was used to analyze the impact of the 2008–2009 crisis in the financial and real The first state-level RSPM results were presented to the Kansas’ Long-Term Care Services Task Force . “Retirement Readiness Ratings and Retirement Savings Shortfalls for Gen Xers: The Impact of Eligibility for Brief, no. 297 (Employee Benefit Research Institute, September 2006). adequacy; howeve retire r, alterna ment tiv , and e ver sm ion an s o y fsi tm hep m ly op du eb l a lillo sh a pr w sim o ilar ject an ed aly av sis er for age reresul placet m te h n at t ra will b tes ae nd co orr the ect r only “Pension Savings: Are Workers Saving Enough for Retirement?” estate y co ears mn atrib rke ots u f fu ti oo n ture e n re s at tire 1 me lig 5ib perc ntil iit nc yent o an me d o o af c dn eo ly qm ua 5p c .2 y ensati p (V erce anD oe n nrh t , the feo i, r t Fe em hbo rua s pe lo rwith y y ee 2011) ’s 2succes 0. o r mo s rat re y es ears can o v f ary on July 11, 2002 (VanDerhei and Copeland, July 2002), and the results of the Massachusetts study were Participation in a 401(k) Plan.” EBRI Notes, no. 6 (Employee Benefit Research Institute, June 2012): 9–21. 7 thresholds. 50 percent of the time, without acknowledging these limitations. elig from ib 6 ility 2 p .er cent to 77 percent, depending on whether employees are assumed to opt . “Defin pe re ds Be ente ne dfi t oP n la Dn e c Fre . 1,e z 2002 es: W (V ha onD 's A erhe ffeci te ad n,d Ho Cop w M elau ncd h,, De anc de Re mbp elr ac 2002) ing L.o st Accruals.” EBRI Issue Brief, An April 2011 article introduced a new method of analyzing the results from RSPM (VanDerhei, April . “Retireo m en The t Rea fo du inn ed ss atio Ran tin fg os r a EB ndRI Re ’s a tire nm alysis is ent Sava in st gs o Sh cha ortf sti ac lls m fo icro r Gen -sim Xe urs lati : T o hn e m Im o pd ael ct o that f Elig was ibility for no. 291 (Em out po lof t yeh ee Be au nt eo fim t Re atic sea esc rchala Ins tio titu n te and , Ma whet rch 20 h 0er 6). t hey are assumed to remember/retain 2 2011). Rather than simply computing an overall percentag 2e of the simulated life paths in a particular 2003 Stud ies were RS p Pe M rfw orm as e ex dp for and Oreg ed to o n a, Ka nati no sna as a l mo ndd M elas --s ach the u firs set tt na s. tional For ad , d mic itio ro n- al simula detail, tion, ple re asti ere se me e Van nt-inc De orh me e- i and created in 2001 originally to assist three states in assessing the adequacy of future Participation in a 401(k) Plan.” EBRI Notes, No. 6 (Employee Benefit Research Institute, June 2012): 9–21. their previous level of contributions when they change jobs vs. reverting back to the ? Factors impacting and influencing retirement readiness: . “Proje c ac o dti ho eo qn rt ua s o tha cy f Fu mo t w tu d ore e uld l, Ret bno uilt it re ha in mv e pe n a t rt suf In fro c fic om ie mnt e a Se dre mini tir cue s rime tra ty: ti nt Im v einc p 401( ac ot me ok f L ) to d o a n ptg a a T y . Th e fo rm r e the Ca init ire saimul l Irn es sa u ult te ras d n w c ee xp e.” re e2 ns p 0re 0 e5 ss, A e the nte me d ri ne c aa w t n the Copeland (September 2001, July 2002 and December 2002). cohorts of retirees; EBRI’s model was expanded to a national assessment in 2003. The Thursday, Jan. 31, 2013 plan’s initial default. . “Retire me mtho ent dI n cc oo mp me ute Ad de the qua p ce yrc fo er Bo ntag oem oef rs ho aus nd e Gen holds X tha erst : w Ev ould ide nme ce f ero t tha m tt hree 2 quir 01e 2me EBRI Re nt more tire tha me n na t Security Society on Aging/National Council on Aging Joint Conference, March 2005. EBRI December 2003 policy forum (VanDerhei and Copeland, 2003). The basic model was subsequently appendix details the studies undertaken as part of our project. 3 ® SD-430 Dirksen Senate Office Building 1. Availability of defined benefit (pension) plans. Projection Model. ” EBRI Notes, no. 5 (Employee Benefit Research Institute, May 2012): 2–14. Of course, deferring retirement age beyond age 65 will improve the situation. Baseline results from the EBRI specified percentage of times in the simulation. modified to quantify the beneficial impact of a mandatory contribution of 5 percent of compensation for o Regarding turnover rates, the most re cent U.S. Census Bureau data show that the o EBRI has previously published (August 2012) an analysis illustrating the tremendous . Testimony. U.S. Congress. Senate Special Committee on Aging. “Do We Have a Crisis in America? Results Retirement Security Projection Model® indicate that the lowest preretirement income quartile would need to testimony for the Senate Special Committee on Aging (VanDerhei, January 2004). . “Modifying the Federal Tax Treatment of 401(k) Plan Contributions: Projected Impact on Participant Account As explored in the June 2011 EBRI Issue Brief, the RSPM allowed retirement-income adequacy to be ? What percentage of Baby Boomers and Gen Xers are likely to run short of money in o im verall portance medio an f d tefin enued ben re of wefit orker plan s— s in ach the mid iev po in in g t r o et f w irem age ent inc and salary ome w ad o equ rkers’ acyl f eng or Bab th oy f defer retire Fro m m e t n h t eage t EBRI o 84 -ERF Re before tire 90 me pn et rce Sen ct uo rif ty t Pro he h je oc uts io en h M old os d wou el” (T ld -1 h 4av 1), e2 a7 50 Jap ne . 2 rce 00 n 4t . p robability of success. Balances.” EBRI Notes, no. 3 (Employee Benefit Research Institute, March 2012): 2–18. assessed at retirement ages later than 65 (VanDerhei and Copeland, June 2011). 2004 The model was enhanced to allow an analysis of the impact of annuitizing defined contribution and IRA retirement, based on the current system/as sumptions? employment in their current jobs—was 5.4 years in 2012, compared with 5.0 years in Although a significan Boo t m poers rtion an od f t G hen X e imp ers. O rovem ve erall nt ta , t kes he p presenc lace in th e eo fir f a st d fo efi ur ny ed ben ears aft efit er age 65, accruath l at e imp age ro 6 v5 e ment VanDerhei, Jb aa cla k, nc ae ns d Cra at re ig tire Co m peent lan ad g. e“ T (V ha enD Im ep rhe acti a on f d Def Cop erre in la gn Re d, 2004) tireme. n t Age on Retirement Income o Approximately 44 percent of Baby Boomer and Gen-Xer households are simulated to be tends to level off in the early 70s before picking up in the la te 70s and early 80s. Households in higher . “Tax Reform 1 redu 9 Opt 83ces . io Ho n t s: h we Pro e “ vat m er, o -risk tia ns g Re n ” pe ote tire rce dm bn e ytage by n a r t Se ece curi n1 ty t 1 .” EBRI No .6 EBRI I percentage s tes sue p Br ub i p e lif, o catio in nots. . 3 n 6 Th (D 4 (E e ece d m efin p m lob yed b er ee Be 20 enefit 1 n2 e), fit the data Re plan sea rch In a July 2011 EBRI Notes article (VanDerhei, July 2011), RSPM was used to provide preliminary 3 Adequacy.” EBRI Issue Brief, no. 358 (Employee Benefit Research Institute, June 2011). preretirement income quartiles start at a much higher level, and therefore have less improvement in terms of at risk of running short of money in retir ement, assuming they retire at age 65 and on employee tenure—the amount of time an individual has been with his or her current Institute, No adv van emtage ber 2(as 011m ). easured by the gap between the two at-risk percentages) is particularly evidence of the impact of the “20/20 caps” on projected retirement accumulations proposed by the 2005 Additional refinements were introduced to evaluate the impact of purchasing long-term care insurance 4 additional households reaching a 50 percent success rate as retirement age is deferred for these households. retain any net housing equity in retirement until other financial resources are depleted. em valu pab loy le f er— or t sho he w lothat wes c t-are inco er m jo e b qsu nev artil er e bu exist t als ed fo o has r m ao st st ro wor ng i ke mrs pac and t o hav n the e c m oid nti dn le c ued lass . “The EBRI National Ret Commi iremen st sRea ion o dn iRes nFi es ss ca Ra p l on Rti en sse g p:T ons M tio Re bility H tire ea am nd r e in R ng t eIn fo c rm Ques om . e Pre tion paras ti on and Future Prospects.” EBRI on retirement income adequacy (VanDerhei, 2005). . Testimony. U.S. Congress. Senate Finance Committee. Tax Reform Options: Promoting Retirement Security (VanDerhei, June 2011). However, that includes a wide range of personal circumstances, from individuals not to exist for most workers. These tenure results indicate that, historically, most (the reduction in the at-risk percentage for the second and third income quartiles Issue Brief, no. 344 (Employee Benefit Research Institute, July 2010). (T-170). 15 Sept. 2011. The August 2011 EBRI Notes article (VanDerhei, August 2011) used RSPM to demonstrate the impact of 2006 The model was used to evaluate the impact of defined benefit freezes on participants by simulating the projected to run short by as little as a dollar to those projected to fall short by tens of workers have repeatedly changed jobs during their working careers, and all evidence combined is 9.7 percentage points). 4 Jack VanDerhei, Ph.D. These “at-risk” levels are some 5–8 percentage points LOWER than what was found in 2003, largely due to the . “The I dm efine pacd t o bfe PPA o nefit pn la Re ns ti in rea m chie ent vIn ing co re mteire fom r e 4nt 01( inc k) o Pa me rti a cid pe aq nua ts.” cyEBRI for Ba Isbsyu Boo e Brme ief,rs n o a. nd 31 Ge 8 (E n m Xe prs lo.y ee minimum employer-contribution rate that would be needed to financially indemnify the employees for . “The Importance of Defined Benefit Plans for Retirement Income Adequacy.” EBRI Notes, no. 8 (Employee thousands of dollars. Nearly one-half (49.1 percent) of Gen Xers are projected to have at sug gests that they will continue to do so in the future. Research Director growing adoption of automatic enrollment by 401(k) plan sponsors. Benefit Research Institute, June 2008). the reduction in their expected retirement income under various rate-of-return assumptions (VanDerhei, Benefit Research Institute, August 2011): 7–16. least 20 percent more than is simulated to be needed; approximately one-third (31.4 2. FuturIn e elig Sept ib emb ility for er it w a de as us fin ed ed c to s on uptr po ib rt uttion estimony plan .b efore the Senate Finance Committee (VanDerhei, Employee Benefit Research Institute (EBRI) March 2006). 5 . “ERISA At Septe p m 3erce 0 b: eT r h 2011) n et) De ha c in lv in e e a bet n oaf ly Pri we zing va en tthe e 8 -Se 0 p – c o1 to te 2 r De ntia 0 per lf iimp ncent eda Be ct o n of e f fi the fina vta Pro rioum s ity s n ep ci se al res a s n od f An ta oxu n -re rces uity fo Pa rm nece y om pteion sn sary tss: o W t n h o re a c t tir o W v eier me ll It the nt 5. Leakag o e EBRI research has previously documented (May 2012) that the number of future years . “Capping Tax-Preferred Retirement Contributions: Preliminary Evidence of the Impact of the National See VanDerhei (November 2012). Mean?” EBRI I retires m su ent e Bri ee xp f, enses no. 269 an (E dm u pn lo in ye sur e Be ed health nefit Res c ear arc e hc Io nsts stitu ; te an , M d abo ay 20 u0 t 4 1 ). in 5 (19.4 percent) inc o ome If “ . Th succ is w ess as” e is xpd and efin eded as a in the No chv iev em in bg er an 8 2011 0 pe EBR rcent I Issu r eeal r Brief epl (Vace anDm erhe ent r i, No ate ve fro mbe m r S 2011) ocial . Later that w that yeo ar, rk a ers n up ar de ate elig d vib ers le ion to partici of the mo pate del in a defin was develop ed e c d o to n trib enhu anc tio en the plan EB R hI as int ae t rre acm tive e ndous Commission on Fiscal Responsibility and Reform Recommendations.” EBRI Notes, no. 7 (Employee Benefit 5 6 8 ® are projected to have less than 80 percent of what is needed. Ballpark E$timate by providing Monte Carlo simulations of the replacement rates needed for specific See VanDerhei (Ma im Secur p y 20 act ity 12 in and ) t . heir a 401t(-k) risk r accum atinu glatio s. Spn ecificall s comy b,in Gen ed, Xe then rs wi wo th no rkers ages future 2y 5ears –29 o in f the l DC pl oan we st- Research Institute, July 2011): 2–6. . “Can America Afford Tomorrow's Retirees: Results From the EBRI-ERF Retirement Security Projection 2012 A March 2012 EBRI Notes article (VanDerhei, March 2012) used new survey results to update the ® probain bilco itie m s e of qre uartil tireme e nt (w -inc hoo will h me ad av eq e ua m cy o re und than er alte 30 rn y aears tive-ris ofk - sim man ua lated geme e nt lig trib ea iltm itye f nt osr (VanDerhei, eligibility would run short of money in retirement 60.7 percent of the time, whereas Model. ” EBRI Issue Brief, no. 263 (Employee Benefit Research Institute, November 2003). analysis of the potential impact of various types of tax-reform options on retirement income. 7 . “Retirement Income Adequacy: Alternative Thresholds and the Importance of Future Eligibility in Defined See VanDerhei (June 2012). ? Of th Seo pte se p m p articip bre o rj 2006) ecatio ted. t no in ru an n aut shor ot m oa f m tic e on ne ro y ll in m r en ett ir e 4me 01(k) nt, pla hon w ), muc will h o n is ly th ex ep serienc hortfa e lla ? 6.1 fewer than 1 in 5 (18.2 percent) of those with 20 or more years of future eligibility are Contribution Retirement Plans.” EBRI Notes, no. 4 (Employee Benefit Research Institute, April 2011): 10-19. . “Kansas Future Retirement Income Assessment Project.” A project of the EBRI Education and Research The May 2012 EBRI Notes article (VanDerhei, May 2012) provided 2012 updates for the previously o Looking only at those situations where shortfalls are projected, in May 2012 EBRI percentage point decrease in success resulting from the COMBINATION of cashouts, simulated to run short of money in retirement. 8 2008 RSPM was significantly enhanced for the May 2008 EBRI policy forum by allowing automatic enrollment TM 9 For purp Fu os ne ds a on f t d t hh ise a M naly ilba sn isk , M the em te orm rial F 40 u1(k) nd. J accu uly 1 m 6u , lat 20ion 02.s includes 401(k) balances and IRA rollovers from published EBRI Retirement Readiness Ratings as well as the RSS. . “A Post-Crih p sro ard is jec As shi ste ep s d w s t m h ith ea nt d t the o rawals, f Ret sho ire r m an tfall ed n lo t s In fo an co r s m Early e a Ad cco Bo erd quo in am c gy ers f to o r Ba EBRI r (ind by ivid Bo esu earch oals b merso a . T rn nd b h Gen e et im we X pe en 1 act rs.” when 9 EBRI I 48–1 ys 9 o s 5 u u4 add e) of 401(k) participants with the potential for automatic escalation of contributions to be included 401(k) plans at job change. Brief, no. 354 (Employee Benefit Research Institute, February 2011). vary from approximately $70,000 (per individual) for married households, increasing to 3. Increasing in defa the u im lt d pefe act ro ra f l l r oa an tes defau to 6 pe lts is rcen less t t. han 1 percentage point higher (approximately 7.1 . “Massachusetts Future Retirement Income Assessment Project.” A project of the EBRI Education and The June 2012 EBRI Notes article (VanDerhei, June 2012) introduced severity categories in the RSS (VanDerhei and Copeland, 2008). 9 p $9 erce 5,00 n0 tag fo e r po sing inle ts m foales r all f an ou dr facto $105,0 rs c 0 0o fm or sin bined). gle fe males. The aggregate retirement Reseo a rch A p Fulan nd a desig nd the n M feat ilbau nr ke M oe fte mo n ri sug al Fu gn est d. ed a Dece s a mbway er 1, to 20 im 02.p rove retirement income adequacy projections for Gen Xers. . Testimony. U.S. Congress. Senate Health, Education, Labor and Pensions Committee. The Wobbly Stool: VanDerhei, Plug the Drain: 401(k) Leakage and the Impact on Retirement, DCIIA Webinar, February 2012. 2009 Additional modifications were added for a Pension Research Council presentation that involved a income deficit number, taking into ac count current Social Security retirement benefits in 401(k) plans with automatic enrollment is to increase the initial default deferral rate Retirement (In)security in America (T-166). 7 Oct. 2010b. . “Oregon Future Retirement Income Assessment Project.” A project of the EBRI Education and Research The August 2012 EBRI Notes article (VanDerhei, August 2012) provided additional evidence on whether “winners/losers” analysis of defined benefit freezes and the enhanced employer contributions provided and the assumption that net housing equity is utilized “as needed,” as well as uninsured from its current value (typically 3 percent of participant compensation) to 6 percent of Fund and the Milbank Memorial Fund. September 2001. deferring retirement to age 70 would provide retirement income adequacy for the vast majority of Baby . “Retire tom de en fin t S ed a vcin og ntrib s Sh ut oion rtfa lp ls la fn os r T at od the ay ’tsime Wo the rke rd se .” fin EBRI No ed bene te fit s,p n la ons . 1 0 w (E ere m fro plozy ee ne ( Be Cop ne ela fit nRes d and ea rch health care costs, is currently estimated to be $4.3 trillion for all Baby Boomers and Gen compensation. Applying that change to 401(k) plans with automatic enrollment Boomers and Gen Xers. InstiV tu ate nD , Oc erhe toi, be 2010) r 201.0 a): 2-9. VanDerhei, Jack, and Lori Lucas. “The Impact of Auto-enrollment and Automatic Contribution Escalation on The views expressed Xe inrs. thi s statement are solely those of Jack VanDerhei and should not be attributed to the Employee Benefit provisions in place, EBRI modeled the impact of making that change, and found that in Research Institute (EBRI), the EBRI Education and Research Fund, any of its programs, officers, trustees, sponsors, or other staff. Retirement Income Adequacy.” EBRI Issue Brief, no. 349 (Employee Benefit Research Institute, November The S2 e0 pt 1 e2 mb meo r re 2012 than EB a RI qNo uart tes er article of th ( oV se anD in the l erhei, o Sw epest tem -in bec r o2012) me q u ana artile lyzed who the had impa pr ct ev of iinc oure sly asing . “Retire Als moe in nt 2009, Incom e a A ne dw eq s uub acro y f utin or T eo w da as y ’s a d W de od rk to ers a:ll How ow s Ce imula rtatio in, ns How of v M au riou ch s W sity ll Ile t Co s of st, ta a rg ne dt Ho -daw te Do fund ess for The Employee Benefit Research Institute is a nonprofit, nonpartisan, education and research organization established in 2010); and DCIIA Research Report (November 2010). ? Whthe at id s t e N faul h OT e tc bee u co rntrib re nn succe t ution statu sra sfu ste ol un f w for o d amen uto er act ma itic n u al re enro p tilan re llme men defaul nt t401( ? t c ko ) n ptrib lansu . tion rates would now attain Eliga ib c ilio ty mp foa r Pa risort n ic w ip ith atip oa nrticip in a a Def nt-id nire edc Co ted n tr iniv be us titme on P nts lan ( H Va enD lp? e” rhe EBRI No i, June te 2009) s, no.. 9 (Employee Benefit Washington, DC, in 1978. EBRI does not take policy positions, nor does it lobby, advocate specific policy recommendations, or o The challenge of preparing for a financially secure retirement can be even more Research retire Institu m te ent , Se inco ptem m be e r 2 ad 0equ 10): 1 acy 3– 20. as a result of raising the auto-deferral to 6 percent. When receive federal funding. The November 2012 EBRI Notes article (VanDerhei, November 2012) reclassified the Retirement em daup nlo tin yee g fo s in r w the hig omen, hwho est-i t nend com te oq liv u artil e lon e g w er ere than an al my e zn ed un , are d freq er the s uently am in e the set o wor f kforce Readiness Ratings to provide additional information on those substantially above the threshold; th EBRI 1100 13 St. NW #800 Washington, DC 20005 (202) 659-0670 www.ebri.org for fewer years, and who may earn less than their male counterparts. 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