PLANSPONSOR - June/July 2018 - 52
BEHAVIORAL FINANCE
The Sum of All Sources
With the right support, low earners can feel confident about retirement
I
n a counterintuitive way, Andrew Biggs,
a Washington, D.C.-based resident
scholar for the American Enterprise
Institute (AEI), says, lower-income earners
have a good chance of maintaining their
quality of life after they finish working, so
long as they take the right approach to balancing
saving and spending while in the
labor force.
" Judging the adequacy of retirement
saving is a complex task without straightforward
answers, " he says. " For poorer
households, however, a simpler and more
easily verifiable framework is possible. "
Before joining AEI, Biggs held
multiple roles at the Social Security
Administration (SSA), and he was also part
of President George W. Bush's Commission
to Strengthen Social Security. In all of
these gigs, he spent significant time and
52 PLANSPONSOR.com June-July 2018
effort reflecting on the challenges faced
by lower-income earners when it comes to
planning for a comfortable retirement.
The Demographic Group
As Biggs points out in a 2017 AEI paper,
" How Hard Should We Push the Poor to
Save for Retirement?, " Census Bureau data
show that, as of 2015, 8.8% of Americans
ages 65 and over had an income below the
poverty line. To be clear, this measurement
includes retired Americans' Social
Security checks. Very roughly speaking-
because real-life benefits depend on an
individual's work history-the average
retiree is getting about $16,000 per year
from Social Security, which is about 133%
of the federally defined poverty level.
" The Current Population Survey
[CPS], sponsored jointly by the U.S. Census
Art by Jesse Tise
Bureau and the U.S. Bureau of Labor
Statistics [BLS], is the primary source of
labor force statistics for the population of
the U.S. [that is] used to measure poverty
and is poor at counting the incomes that
retirees draw from IRA [individual retirement
account] and 401(k) balances, and [it]
captures only a little more than half of the
pension and annuity income that retirees
report to the IRS, " Biggs says. " This implies
that the true elderly poverty rate is likely
even lower than the 8.8% rate reported in
Current Population Survey data. "
As the 2015 Census Bureau data show,
among Americans ages 55 through 64,
10.3% had an income below the poverty
threshold. Among those 45 through 54,
the poverty rate was 9.5%, while the occurrence
of poverty was 12.0% among those
35 through 44 and 12.9% among those 25
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PLANSPONSOR - June/July 2018
Table of Contents for the Digital Edition of PLANSPONSOR - June/July 2018
Opportunities Knock
2018 Plan Administration Guide, Part 2
Narrowing It Down
ESG Comes to Light
Protection at All Costs
The Sum of All Sources
Upwardly Mobile
PLANSPONSOR - June/July 2018 - C1
PLANSPONSOR - June/July 2018 - FC1
PLANSPONSOR - June/July 2018 - FC2
PLANSPONSOR - June/July 2018 - C2
PLANSPONSOR - June/July 2018 - 1
PLANSPONSOR - June/July 2018 - 2
PLANSPONSOR - June/July 2018 - 3
PLANSPONSOR - June/July 2018 - 4
PLANSPONSOR - June/July 2018 - 5
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PLANSPONSOR - June/July 2018 - 15
PLANSPONSOR - June/July 2018 - 16
PLANSPONSOR - June/July 2018 - 17
PLANSPONSOR - June/July 2018 - Opportunities Knock
PLANSPONSOR - June/July 2018 - 19
PLANSPONSOR - June/July 2018 - 20
PLANSPONSOR - June/July 2018 - 21
PLANSPONSOR - June/July 2018 - 2018 Plan Administration Guide, Part 2
PLANSPONSOR - June/July 2018 - 23
PLANSPONSOR - June/July 2018 - 24
PLANSPONSOR - June/July 2018 - 25
PLANSPONSOR - June/July 2018 - 26
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PLANSPONSOR - June/July 2018 - Narrowing It Down
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PLANSPONSOR - June/July 2018 - ESG Comes to Light
PLANSPONSOR - June/July 2018 - 47
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PLANSPONSOR - June/July 2018 - Protection at All Costs
PLANSPONSOR - June/July 2018 - 51
PLANSPONSOR - June/July 2018 - The Sum of All Sources
PLANSPONSOR - June/July 2018 - 53
PLANSPONSOR - June/July 2018 - Upwardly Mobile
PLANSPONSOR - June/July 2018 - 55
PLANSPONSOR - June/July 2018 - 56
PLANSPONSOR - June/July 2018 - C3
PLANSPONSOR - June/July 2018 - C4
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