CONSUMER CHOICE
Preparing Americans for Retirement A
By Sarah Lai Stirland
t the age of 74, Alicia H. Munnell is the living embodiment of her own advocacy: Postponing retire-
ment and working as long as possible. The economist is the founder and direc-
tor of Boston College’s Center for Retire- ment Research. Under her leadership for the past 20 years, the center has become an influential source of ideas for both pol- icymakers and the general public. It works to provide easy-to-implement and common sense approaches, given the realities and constraints of America’s retirement crisis.
Maintaining Lifestyle After Retirement The Center’s research, in the form of its “Na- tional Retirement Risk Index,” for example, shows that half of all American households are at risk of not being able to maintain their life- styles after they retire. This is up from 30 percent in 1989. (The index takes a sample of today’s working households and projects their retire- ment income relative to their pre-retirement earnings at age 65.) The reasons are many: » Traditional pensions have evaporated in the private sector. In their place are 401(k) plans, and they don’t come close to replacing the level of income that in- dividuals make during their careers.
» Individuals don’t contribute enough to 401(k) accounts to maintain their life- styles, yet they’re generally living longer than generations before them.
» Health care costs are rising. Social Secu- rity benefits are shrinking.
» Half of those working in the private sector don’t have access to any employer-spon- sored retirement plan at all.
Avoiding a Retirement Crisis Munnell and the Center’s work focuses on what individuals and policymakers can do to
52 SENIOR LIVING EXECUTIVE / ISSUE 5 2017
“Somebody asked me when I was setting up the Center for Retirement Research whether I would run out of questions,” said Munnell. “I haven’t come close to that!”
address this crisis. She generally advocates that people work longer—up to the age of 70 if possible, so that they can maximize the payout they receive from social security, and allow investments in their 401(k) accounts to grow. She also thinks that home ownership should play a bigger role in moving individ- uals out of their retirement financial black holes. Households could obtain reverse mortgages on their homes, she advocates in her 2014 book “Falling Short: The Coming Retirement Crisis and What to Do About It.” It is the 23rd book that Munnell has either authored or co-authored. She also advocates for the idea of letting older Amer- icans defer their property taxes until they pass away when local governments and the state can recoup those taxes with interest when their houses are sold.
State Legislation Aims to Help For those people in the private sector with no employer-sponsored retirement plan at all, Munnell and her colleagues support the idea of “automatic IRAs.” These programs mandate that employers without retirement plans automatically enroll their workers in individual retirement accounts with contri- butions from payroll deductions. Employees could opt out, but those that opt in would receive a saver’s tax credit. Federal legisla- tion on the matter has stalled, but California, Connecticut, Illinois, and Oregon have en-
Thought Leader Profile
Alicia H. Munnell Director, Center for Retirement Research, Boston College
acted their own measures. In May, President Trump signed legislation (
http://bit.ly/Au- to-IRA) that advocates worry could hinder the roll-out of the legislation, but some states like Oregon are pressing ahead to implement their plans anyway. The Center for Retire- ment Research has worked with the state administrations in Connecticut and Oregon by conducting feasibility studies, a field test, and market assessments. Prior to this position with the Center, Munnell worked on President Bill Clinton’s Council of Economic Advisors between 1995 and 1997. She has also served as as- sistant secretary for economic policy at the U.S. Treasury Department and as director of research for the Federal Reserve Bank of Boston. Munnell blogs frequently on finance, retirement, and public policy at CBS MarketWatch (
http://bit.ly/Munnell) and the Center’s work is often referenced on Capitol Hill.
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