Thursday, December 25, 2008
Monday, December 22, 2008
401(K) Plan Asset Allocation, Account Balances, and Loan Activity in 2007
Abstract:
Over the past two decades, 401(k) plans have grown to be the most widespread private-sector employer-sponsored retirement plan in the United States, and now serve as the most popular defined contribution (DC) plan, representing the largest number of participants and assets. In 2007, 48.5 million American workers were active 401(k) plan participants. By year-end 2007, 401(k) plan assets had grown to represent 17 percent of all retirement assets, with $3.0 trillion in assets. In an ongoing collaborative effort, the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) collect annual data on millions of 401(k) plan participants as a means to accurately portray how these participants manage their accounts. This paper serves as an update of EBRI and ICI's ongoing research into 401(k) plan participants' activity through year-end 2007. The report is divided into four sections: The first describes the EBRI/ICI 401(k) database; the second presents a snapshot of participant account balances at year-end 2007; the third looks at participants' asset allocations, including a new analysis of 401(k) participants' use of lifecycle funds; the fourth focuses on participants' 401(k) loan activity.
As with previous EBRI/ICI updates, analysis of a consistent sample of 401(k) participants (those that have been in the same plan since 1999) is planned; this additional analysis is expected to be published early in 2009. It should be noted that the year-end 2007 401(k) data reported in this analysis, by definition, do not reflect market losses or participant account activity in 2008. The impact of the 2008 financial market performance on average 401(k) balances is strongly affected by age and tenure of the individual participant, and it would be inaccurate to make a single estimate of an average 401(k) account outcome for 2008.
Keywords: 401(k) plans, Asset allocation, Employment-based benefits, Pension plan assets, Pension plan loans, Retirement plans, Self-directed investments
JEL Classifications: D31, G11, J26
Accepted Paper Series
Thursday, December 18, 2008
Thursday, December 11, 2008
Monday, December 08, 2008
Bechtel settles 401(k) plan lawsuit
Bechtel settles 401(k) plan lawsuit Pensions and Investments, December 8, 2008,
Bechtel settles 401(k) plan lawsuit
Bechtel settles 401(k) plan lawsuit Pensions and Investments, December 8, 2008,
Saturday, December 06, 2008
Monday, December 01, 2008
Washington Post |"How much longer would typical workers have to work to recoup their losses?"|December 6, 2008
Washington Post |"How much longer would typical workers have to work to recoup their losses?"|December 6, 2008
That's a difficult question to answer, and it depends on many factors, such as how much people save each year, how quickly the money grows and how long a person has been working. We asked Jack L. VanDerhei, research director for the D.C.-based Employee Benefit Research Institute (EBRI), to try to help us calculate an answer. First, consider that total retirement wealth lost from a year ago is nearly $4 trillion. We're talking about $2.0 trillion in lost income in 401(k)s and Individual Retirement Accounts (IRAs), and $1.9 trillion in traditional defined-benefit plans.
http://www.washingtonpost.com/wp-dyn/content/graphic/2008/12/06/GR2008120600089.html?hpid=topnews
Saturday, November 29, 2008
Newark Star-Ledger|" Who else will pull out of their 401(k)s?: As economy slides, more employees give up on retirement plans"|November 29, 2008
Newark Star-Ledger" Who else will pull out of their 401(k)s?: As economy slides, more employees give up on retirement plans"November 29, 2008
http://www.nj.com/business/index.ssf/2008/11/who_else_will_pull_out_of_thei.html
http://www.nj.com/business/index.ssf/2008/11/who_else_will_pull_out_of_thei.html
Monday, November 10, 2008
Advisers fret that clients will trim 401(k) participation if matches are cut; Will G.M.'s elimination of contributions have a domino effect?
Investment News, November 10, 2008, NEWS; Pg. 15, 987 words, Lisa Shidler
Sunday, November 09, 2008
Thursday, November 06, 2008
Wednesday, November 05, 2008
Some companies trimming, halting their 401(k) matches
Some companies trimming, halting their 401(k) matches
By David Pitt
The Associated Press
By David Pitt
The Associated Press
Tuesday, November 04, 2008
Friday, October 31, 2008
Older savers dire straits
USA TODAY, October 31, 2008 Friday, MONEY; Pg. 3B, 1437 words, Christine Dugas
Thursday, October 30, 2008
Wednesday, October 29, 2008
More firms may end 401(k) match; GM's move is the latest, but probably not the last
USA TODAY, October 29, 2008 Wednesday, MONEY; Pg. 1B, 412 words, Chris Woodyard
Thursday, October 23, 2008
Working Longer As Jobs Contract
The New York Times, October 23, 2008 Thursday, Section F; Column 0; Retirement; Pg. 8, 2042 words, By STEVEN GREENHOUSE
Saturday, October 11, 2008
Wednesday, October 08, 2008
Retirement Savings Lose $2 Trillion in 15 Months
The Washington Post, October 8, 2008 Wednesday, A-SECTION; Pg. A01, 1019 words, Nancy Trejos; Washington Post Staff Writer
Tuesday, October 07, 2008
"The Impact of the Financial Crisis on Workers' Retirement Security"
"The Impact of the Financial Crisis on Workers' Retirement Security"
House Education and Labor Committee
Tuesday, August 12, 2008
Monday, August 04, 2008
(k)Plans: Miss Match?
With automatic enrollment an increasingly prevalent tool for boosting participation in 401(k) plans, some retirement savings experts are asking whether plans should consider eliminating their employer match.
http://www.plansponsor.com/magazine_type3/?RECORD_ID=42450
http://www.plansponsor.com/magazine_type3/?RECORD_ID=42450
Friday, August 01, 2008
August 2008 articles
NPR “All Things Considered,” “Economic Woes Force Many To Postpone Retirement”|August 3, 2008
Older workers are more concerned about their retirement than ever before. “Last year in 2007, 27 percent of active workers were very confident. That dropped all the way down to 18 percent this year, and that’s the single largest decline we’ve ever had,” said Jack VanDerhei, a professor at Temple University, and researcher at the Employee Benefit Research Institute in Washington, D.C.
http://www.npr.org/templates/story/story.php?storyId=93241950
August 11, 2008 | BusinessWeek
Many studies have shown that women lag behind men in saving for retirement. The savings gap is expected to persist for the next 40 years or so, projects researcher Jack VanDerhei, a Temple professor at the Fox School of Business.
Allentown Morning Call|"A moving target"|July 27, 2008
Writes Gail MarksJarvis: "Baby boomers who never got around to saving as much as they hoped promised to keep working past retirement age. The joke in the generation has been: 'I'll just work forever.' And the intent has shown up repeatedly in research. But now along comes an economic downturn, and people are losing jobs. It looks as though Plan B, a lifetime of working, might not be an option to rescue undersavers after all. 'It's a perfect storm,' said Jack VanDerhei, a Temple University professor and fellow at the Employee Benefit Research Institute."
http://www.mcall.com/business/local/all-yourmoney.6518405jul27,0,7066579.story
Chicago Tribune|"Chasing down retirement"|July 27, 2008
Jack VanDerhei had the lead quote in an article on retirement for Baby Boomers. "It's a perfect storm," said Jack VanDerhei, a Temple University professor and fellow at the Employee Benefit Research Institute. Too many people approaching retirement age have saved too little, accumulated too much debt, stretched too far on homes that have lost value and never made good on the promise to save more tomorrow, he said.
Consuelo Mack WealthTrack|July 26, 2008
Jack VanDerhei, RIHM professor, was a featured guest on last weekend's Consuelo Mack WealthTrack on public television. Host Consuelo and VanDerhei discussed the financial plight of retiring baby boomers and how, even at this late date, they can increase their retirement income. He was joined by Barclays Global Investors' Matt Scanlan, co-author of "The Future Shock of Retirement," (a new study warning how much Americans are underestimating their retirement needs), and investment strategist Jason Trennert, founder of Strategas Research Partners. WealthTrack, which Money Magazine recently named the best financial show on television, is the only investment program devoted to long-term, diversified investing. Its format provides guests with sufficient time to have a real discussion, an increasingly rare experience. It airs weekends on some 195 public television channels around the country, including two in New York. On Friday evenings it is shown at 7:30PM on WLIW, channel 21 and on Saturday mornings at 8AM on WNET, channel 13.
October 2008 articles
USA Today|"401(k) losses: Older investors' retirement funds hit hard"|October 31, 2008
Jack VanDerhei, RIHM professor, was recently quoted in USA Today. If they don't have a pension plan and are relying only on a 401(k), the bear market will cut their retirement income by 13.4% to 17.7%, according to analysis by Jack VanDerhei, research director of the Employee Benefit Research Institute.
http://www.usatoday.com/money/perfi/retirement/2008-10-30-retirement-401k-funds-stocks-savings_N.htm
LA Times|"Market downturn shatters faith in stocks"|October 22, 2008
Jack VanDerhei, RIHM professor, was quoted in an article in the LA Times about the stock market.
Sun-Sentinel.com, FL |"The Savings Game: Your investment strategies must evolve"|October 26, 2008
Jack VanDerhei, RIHM professor, was quoted in an article dealing with retirement and savings. While such high allocations to stocks can be OK for younger workers, "it is less certain that those approaching retirement would receive similar recommendations," Jack VanDerhei, EBRI research director, told the House Education and Labor committee this month.
http://www.sun-sentinel.com/business/sfl-flzsave1027sboct27,0,7811576.story
Poughkeepsie Journal, NY|"To ease pain, plan to invest for the long haul"|October 26, 2008
Jack VanDerhei, RIHM professor, was recently quoted in an article that discussed retirement. The only prediction Jack VanDerhei, research director of the nonpartisan Employee Benefit Research Institute, would make about a stock rebound is this: It always has eventually. There are "no guarantees that we are going to have something within a person's life span that will get back to levels it had been," he said. "But if you look at 10-year intervals over the past, typically that's always been the situation."
http://www.poughkeepsiejournal.com/article/20081026/NEWS01/810260345
USA Today|"More companies may end 401(k) match"|October 29, 2008
RIHM professor, Jack VanDerhei, talked about companies ending their 401(k) match plans for employees in a USA Today article. The match is easy to junk because it is essentially a form of profit-sharing by a company, says Jack VanDerhei, research director of the Employee Benefit Research Institute, a Washington think tank.
http://www.usatoday.com/money/perfi/retirement/2008-10-28-pension-401k-match-ending_N.htm?csp=34
WUSA|"More Companies May Drop 401(k) Matches"|October 29, 2008
RIHM professor, Jack VanDerhei, appeared on a TV program to discuss 401(k) plans.
http://www.wusa9.com/news/local/story.aspx?storyid=77726&catid=187
Forbes|"Should a demand for change include 401(k) plans?"|October 30, 2008
Forbes magazine quoted Jack VanDerhei in a story about 401(K) plans.
http://www.forbes.com/feeds/ap/2008/10/30/ap5627671.html
New York Times|"Working Longer as Jobs Contract"|October 22, 2008
Jack VanDerhei, RIHM professor, was quoted in an article in the New York Times that discussed retirement. Jack L. VanDerhei, research director of the Employee Benefit Research Institute, said workers would be making a big mistake if they became so frightened of 401(k)’s that they did not take full advantage of their employer’s 401(k) match. “That,” he said, “would be leaving money on the table.”
USA TODAY|"Social Security recipients to get a raise in 2009"|October 17, 2008
Jack VanDerhei, RIHM professor, was quoted in an article in USA Today that discussed some long awaited good news for retirees. While the increase looks dramatic, "They're going to give retirees just enough to compensate for what inflation is doing to them anyway," says Jack VanDerhei, a fellow at the Employee Benefit Research Institute.
Washington Post|"Retirement Savings Lose $2 Trillion in 15 Months"|October 8, 2008
Americans' retirement plans have lost $2 trillion in the last 15 months. Employees between the ages of 56 and 65 who had the fewest years on the job were the least affected, while those 36 to 45 years old with the longest tenures suffered the steepest declines, said Jack L. VanDerhei of Temple's Fox School of Business.
Recent media hits for EBRI's national 401(k) projection model
Newspapers:
Washington Post (10/8/08) - "Retirement Savings Lose $2 Trillion in 15 Months"
Wichita Eagle (10/8/08) - "401(k)s, Pension Funds Lose $2 Trillion"
Seattle Times (10/8/08) - "Market Losses Take $2 Trillion Out of Retirement Savings"
San Diego Union Tribune (10/10/08) - "Retirement Hopes Deflate in Tumble"
Wall Street Journal (10/11/08) - "Crisis on Wall Street: Statement Shock Hits 401(k)s"
Washington Post (10/12/08) - "Retirement Wreck: Are 401(k)s Still Viable for Saving?"
Charleston Daily Mail (10/13/08) - "Market Swings Affect 401(k)s"
Boston Herald (10/19/08) - "Baby Boomers Go Bust As Retirement Savings Tank"
Providence Journal (10/22/08) - "Slide in Stocks Means Baby Boomers Have Lost a Big Chunk of Their Nest Egg"
Austin American-Statesman (10/26/08) - "Financial Chaos Undermines Security of 401(k) Plans"
Wall Street Journal (11/3/08) - "Investing in Funds: A Monthly Analysis - Financial Crisis Highlights Shortcomings of 401(k) Plans"
The Memphis Daily News (11/4/08) - "Meltdown Highlights Shortcomings of 401(k) Plans"
Fort Worth Star Telegram (11/9/08) - "Is the 401(k) a Failed Experiment?"
Los Angeles Times (11/16/08) - "Calls Grow to Overhaul 401(k) Retirement Plans"
Harrisonburg Daily News Record (12/29/08) - "401(k) Holders Advised to Sit Tight, Hold On"
Wall Street Journal (1/8/09) - "Big Slide in 401(k)s Spurs Calls for Change"
The Oregonian (1/10/09) - "What To Do When the Nest Egg Cracks"
News Service:
Reuters (1/22/09) - "US Lawmakers to Mull Reforms for Shrunken 401(k)s": This article appeared in guardian.co.uk (1/22/09); Alibaba.com
Periodicals:
U.S. News & World Report (10/8/08) - "Retirement Savers Lost $2 Trillion in the Stock Market"
Forbes (10/15/08) - "Rebuilding a Scrambled Nest Egg"
Global Pensions (10/20/08) - "DC to Remain Dominant Despite Downturn"
Plan Adviser (12/2/08) - "Younger 401(k) Participants Saw Account Balance Hike in Downturn"
Web Sites:
OpEdNews.com (10/15/08) - "The Approaching 401(k) Tsunami Following the Stock Quake"
ConsumerAffairs.com (10/16/08) - "Retirement Postponed for More Americans"
CNBC.com (10/22/08) - "Managing Retirement Savings in Volatile Markets"
Bankrate.com (10/22/08) - "Managing Retirement Savings in Down Markets"
MidwestBusiness.com (11/5/08) - "Older Workers Rethinking Retirement Plans; How to Find, Keep a Job Today"
Financial News USA (11/14/08) - "Multiple Crises Sabotage Retirement Plans"
Tampabay.com (1/8/09) - "After Market Drubbing, 401(k) Reconsidered"
Wednesday, July 09, 2008
The Expected Impact of Automatic Escalation of 401(k) Contributions on Retirement Income
Abstract: The Pension Protection Act (PPA) of 2006 allows employers to automatically enroll workers in the company's 401(k) plan and to automatically increase a worker's 401(k) contribution to coincide with a raise or a work anniversary -- though the employee can decline both enrollment and the increase. To qualify for nondiscrimination protections, automatic (or default) contributions must be at least 3 percent in the first year and increase regularly. The provision was added in an attempt to boost 401(k) accounts, the primary vehicle for worker retirement savings. This paper uses data from the 2007 Retirement Confidence Survey (RCS), fielded several months after the enactment of PPA, which asked workers how high they would allow their default 401(k) contributions to go. The result is a first approximation for the expected impact of automatic escalation under the PPA safe harbors for a number of different assumptions about worker and employer reactions.
Keywords: 401(k) plans, Employment-based benefits, Pension plan contributions, Retirement income
JEL Classifications: D91, J26, J33
Accepted Paper Series
Suggested Citation
VanDerhei, Jack, "The Expected Impact of Automatic Escalation of 401(k) Contributions on Retirement Income" . EBRI Notes, Vol. 28, No. 9, September 2007 Available at SSRN: http://ssrn.com/abstract=1015547
Keywords: 401(k) plans, Employment-based benefits, Pension plan contributions, Retirement income
JEL Classifications: D91, J26, J33
Accepted Paper Series
Suggested Citation
VanDerhei, Jack, "The Expected Impact of Automatic Escalation of 401(k) Contributions on Retirement Income" . EBRI Notes, Vol. 28, No. 9, September 2007 Available at SSRN: http://ssrn.com/abstract=1015547
The Impact of PPA on Retirement Savings for 401(K) Participants
Abstract: This paper simulates (under several assumptions) the likely impact of 401(k) plan sponsors switching from voluntary enrollment systems to automatic enrollment designs with automatic escalation of contributions for a significant portion of workers (not just current 401(k) participants or those eligible to participate). This analysis indicates that even under the most conservative assumptions for auto-escalation of contributions, switching 401(k) plans to auto-enrollment is likely to have a very significant positive impact in generating additional retirement savings for many workers, especially for low-income workers. When results are aggregated across all income categories, the increase in the value of 401(k) accumulations at age 65 as a multiple of final earnings for those currently ages 25-29 would be approximately 2.4 to 2.6 times final salary by switching from voluntary enrollment to automatic enrollment. Although the aggregate results favor automatic enrollment, distributional analysis of the differences between the two systems indicates that the higher paid are not likely to benefit as much from such a change. The median 401(k) accumulations for the lowest-income quartile of these workers (assuming all 401(k) plans were voluntary enrollment) would only be 0.1 times final earnings at age 65 (this is largely due to the fact that 41 percent of workers - as opposed to participants - were assumed to have zero balances at age 65). However, if all 401(k) plans are assumed to be using the auto-enrollment provisions under PPA, the median 401(k) accumulations for the lowest-income quartile jumps to 2.5 times final earnings under the most conservative assumptions and 4.5 times final earnings under the most beneficial assumptions. Even for the top 25 percent of these workers (when ranked by 401(k) accumulations as a multiple of final earnings), there are large increases: the multiple under a voluntary enrollment scenario is 1.8 times final earnings, whereas auto-enrollment provides multiples ranging from 6.5 to 10.4, depending on auto-escalation of contributions. Comparing income replacement targets generated in previous EBRI work with these simulated 401(k) accumulations shows that, even with the large increases that can be expected for many workers under the safe harbor auto-enrollment plans introduced by PPA, and with current-law Social Security benefits, additional resources will still be needed for some of them.
Keywords: Employment-based benefits, Pension plan coverage, Pension plan design, Retirement income, Savings
JEL Classifications: J26, J33
Accepted Paper Series
Suggested Citation
VanDerhei, Jack and Copeland, Craig, "The Impact of PPA on Retirement Savings for 401(K) Participants" . EBRI Issue Brief No. 318 Available at SSRN: http://ssrn.com/abstract=1152392
Keywords: Employment-based benefits, Pension plan coverage, Pension plan design, Retirement income, Savings
JEL Classifications: J26, J33
Accepted Paper Series
Suggested Citation
VanDerhei, Jack and Copeland, Craig, "The Impact of PPA on Retirement Savings for 401(K) Participants" . EBRI Issue Brief No. 318 Available at SSRN: http://ssrn.com/abstract=1152392
Sunday, June 15, 2008
Retirement confidence dropping dramatically: Workers finally may be waking up to retirement's realities, but they still aren't taking action to ensure
Benefit News, June 15, 2008, 664 words, Lynn Gresham
Wednesday, June 04, 2008
June 2008 articles
U.S. News & World Report"Health costs after 65: ouch, even with Medicare"June 4, 2008
Sunday, June 01, 2008
Monday, April 14, 2008
Wednesday, April 09, 2008
Tuesday, February 12, 2008
401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2006
Abstract: Over the past two decades, 401(k) plans have grown to be the most widespread private-sector employer-sponsored retirement plan in the United States, and now serve as the most popular defined contribution (DC) plan, representing the largest number of participants and assets. In 2006, 50 million American workers were active 401(k) plan participants. By year-end 2006, 401(k) plan assets had grown to represent 16 percent of all retirement assets, with $2.7 trillion in assets. In an ongoing collaborative effort, the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) collect annual data on millions of 401(k) plan participants as a means to accurately portray how these participants manage their accounts. This paper serves as an update of EBRI and ICI's ongoing research into 401(k) plan participants' activity through year-end 2006. The report is divided into five sections: The first describes the EBRI/ICI 401(k) database; the second focuses on changes in participant account balances over time, analyzing a group of consistent 401(k) participants; the third presents a snapshot of participant account balances at year-end 2006; the fourth looks at participants' asset allocations; and the fifth looks at participants' 401(k) loan activity.
Keywords: 401(k) plans, Asset allocation, Employment-based benefits, Pension plan assets, Pension plan loans, Retirement plans, Self-directed investments
JEL Classifications: D31, G11, J26
Accepted Paper Series
Suggested Citation
VanDerhei, Jack, Holden, Sarah, Copeland, Craig and Alonso, Luis, "401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2006" . EBRI Issue Brief, No. 308, August 2007 Available at SSRN: http://ssrn.com/abstract=1005379
Keywords: 401(k) plans, Asset allocation, Employment-based benefits, Pension plan assets, Pension plan loans, Retirement plans, Self-directed investments
JEL Classifications: D31, G11, J26
Accepted Paper Series
Suggested Citation
VanDerhei, Jack, Holden, Sarah, Copeland, Craig and Alonso, Luis, "401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2006" . EBRI Issue Brief, No. 308, August 2007 Available at SSRN: http://ssrn.com/abstract=1005379
Who is Ready for Retirement, How Ready, and How Can We Know?
Research Report
Sophie Korczyk, Ph.D
January 2008
Monday, January 28, 2008
Friday, January 25, 2008
Thursday, January 17, 2008
Wednesday, January 09, 2008
DREAMS ABOUT RETIRING WITHER
St. Petersburg Times (Florida), April 9, 2008 Wednesday, BUSINESS; Pg. 1D, 642 words, HELEN HUNTLEY, Personal Finance Editor
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