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New - 9/12/2008 Removing Barriers to Retirement Saving in Medicaid and Supplemental Security Income
This paper discusses the outdated asset tests that can discourage many families from saving for retirement by disqualifying them from receiving assistance from Medicaid and Supplemental Security Income (SSI). click to download (368k)
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Changing Medicaid and SSI Rules to Encourage Retirement Saving
This policy brief discusses several important changes policymakers can make to encourage low-income families to save for retirement. click to download (80k)
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The Automatic 401(k): Revenue and Distributional Estimates
This paper provides estimates of the effects - on federal revenue and the distribution of after-tax income - of a policy under which all 401(k) plans in the U.S. wer converted to automatic 401(k)s.click to download (367k)
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New - 6/4/2008 Increasing Annuitization in 401(k) Plans with Automatic
Trial Income
Over the next few decades, a substantial number of workers will retire with larger balances in their retirement accounts and have fewer sources of longevity protection than retirees today. They, therefore, must manage these resources to ensure they last throughout their retirement. This paper proposes a policy that would increase the role of lifetime income products in future retirees' overall retirement planning.
click to download (587k)
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Retirement Security for Women: Progress to Date and Polices for Tomorrow
With half of all working women saving an estimated $34,000 in IRA or 401(k) style saving accounts, as compared to an estimated $70,000 for men, the paper examines the available data on women and retirement and offers an array of policy solutions aimed at closing the savings gap between men and women.click to download (205k)
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Increasing Retirement Saving: Clarifying Food Stamp Asset Test Rules
A State by State Analysisclick to download (3219k)
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Pursuing Universal Retirement Security Through Automatic IRAs
This paper proposes an ambitious yet practical set of initiatives to expand dramatically retirement saving in the United States-especially for the 75 million Americans working for employers that do not offer a retirement plan. The fact that half of our workforce does not have access to an employer savings plan along with a declining national saving rate and the expectation that Social Security is unlikely to provide adequate benefits, make the lack of retirement saving a major national problem. Research and experience both point to a simple and effective solution, which we call the "Automatic IRA."click to download (1045k)
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Pursuing Universal Retirement Security Through Automatic IRAs: Executive Summary
click to download (291k)
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Retirement Saving for Middle- and Lower- Income Households: The Pension Protection Act of 2006 and the Unfinished Agenda
The proposition that public policies can and should be used to encourage retirement saving among lower- and middle-income households commands broad, bi-partisan support. Perhaps the most promising recent development in this area has been the rise of the automatic 401(k). The recently-enacted Pension Protection Act of 2006 took significant steps to encourage the use of automatic 401(k)s and the Saver's Credit. However, much remains to be done.click to download (363k)
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Effects of Retirement Security Project Proposals on Private and National Saving: Exploratory Calculations
This paper estimates that making savings easier and increasing incentives to save for middle and low-income households could increase net national saving by $75 Billion a year.click to download (292k)
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Automating Saving: Making Retirement Saving Easier in the US, the UK, and New Zealand
This policy brief summarizes major parallel efforts currently under consideration in the U.S., the UK and New Zealand to address the retirement security shortfall by expanding personal saving for retirement. The proposals would employ a common strategy — promoting “automatic” saving by individuals within a voluntary private pension system — to make private-sector savings a more effective supplement to a base of government-provided pensions.click to download (85k)
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Using Tax Refunds to Increase Savings and Retirement Security
Allowing households to split their income tax refunds between accounts could make saving simpler and, thus, more likely.click to download (128k)
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Leveraging Tax Refunds to Encourage Savings
One of the most auspicious ways to make it easier for households to save, for retirement and other purposes, is by allowing them to directly deposit part of their income tax refund into a savings vehicle. This policy brief examines ways of encouraging households to save at one of their most "savable"¯ moments: when they learn they will receive a substantial federal tax refund.click to download (137k)
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Retirement Security for Latinos: Bolstering Coverage, Savings, and
Adequacy
A new study by The Retirement Security Project and National Council of La Raza shows that Latinos stand to gain significantly from common sense improvements to retirement savings plans. click to download (181k)
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Protecting Low-Income Families' Retirement Savings
The eligibility rules for certain means-tested programs like Food Stamps and Medicaid often discourage saving for retirement by people who are potentially otherwise eligible for and may need these programs. By excluding 401(k) and IRA savings from these asset tests, we would increase the likelihood that lower-income earners will save for retirement. Those who do the right thing by saving should not be excluded from programs that help so many Americans make it through hard times.click to download (465k)
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The Effect of Asset Tests on Savings
This discussion paper reviews the relevant economics literature on the effects of the asset tests within means-tested benefit programs. The asset tests represent perhaps the most substantial financial disincentive for many families to save in retirement accounts. click to download (132k)
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A New Government Matching Program for Retirement Saving
The results of a recent randomized experiment suggest that the presence of an easily understandable and transparent 50 percent match significantly raises participation in and contributions to IRAs. The results confirm the basic idea behind the existing Saver's Credit, which provides a match for retirement saving contributions by low and moderate-income households through the tax code. The study also suggests, however, that the presentation and perhaps the structure of the Saver's Credit could be modified to produce much higher participation rates and contribution levels. In this brief note, the authors therefore propose a revised version of the Saver's Credit that they believe would prove to be more effective at encouraging contributions among middle- and lower-income households.click to download (83k)
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Saving Incentives for Low-Income and Middle-Income Families: A Field Experiment with H & R Block
Awarded the Certificate of Excellence from TIAA-CREF recognizing outstanding scholarly writing on issues of lifelong financial security.
This paper analyzes the effects of a large randomized field experiment, carried out with H&R Block, offering matching incentives for IRA contributions at the time of tax preparation. The evaluation generates two broad findings. First, higher match rates significantly raise IRA participation and contributions. Second, several additional findings are inconsistent with the full-information, rational-saver model, and suggest instead that professional tax assistance, information provision, and ease of saving can play important roles in encouraging IRA contributions among low- and middle-income families.
click to download (578k)
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Automatic Investment: Improving 401(k) Portfolio Investment Choices
Self-direction of investments is a common feature of 401(k) plans, but it is not working as well as it could. Employees frequently fail to diversify their investments or rebalance their portfolios over time. One concern is that workers often invest too large a share of their 401(k) savings in their employer's stock, which can prove especially costly: if the employer falls on hard times, workers stand to lose not only their jobs but also their retirement savings. But even when the plan sponsor does not collapse, poor investment choices impose unnecessary risk on workers, threaten the level and security of retirement income and reduce the public policy benefits from 401(k) tax preferences.click to download (275k)
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The Saver's Credit: Expanding Retirement Savings for Middle- and Lower-Income Americans
The Saver's Credit provides a tax credit for IRA and 401(k)-type plan contributions made by families with incomes of up to $50,000. It is designed to level the playing field for savers who are in lower tax brackets by increasing their tax incentive. The credit was used by more than 5 million tax filers in 2002. Yet the Saver's Credit is severely limited in that it provides no savings incentive to more than 10 million lower-income families who have no federal income tax liability and for those who earn a little more, it provides just a very small incentive to save. In addition, steep declines in the credit rate as income rises saddle working families with sudden tax liability; and the credit is due to sunset in 2006. We can strengthen the Saver's Credit-and better use it to bolster retirement savings-by addressing these shortcomings.click to download (188k)
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Common Sense Reforms to Promote Retirement Security
As the baby boomers near retirement, defects in the nation's private pension system are becoming obvious. Only about half of workers contribute to an employer-sponsored pension plan in any given year, and Individual Retirement Account (IRA) participation rates are substantially lower. Among workers with tax-preferred retirement savings plans, few make the maximum allowable contribution. And despite the many private savings incentives, many househilds approach retirement with meager funds.click to download (78k)
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Automatic 401(k): A Simple Way to Strengthen Retirement Savings
Over the past quarter century, private pension plans in the United States have trended toward a do-it-yourself approach, in which covered workers bear more investment risk and make more of their own decisions about their retirement savings. Some workers have thrived under this more individualized approach, amassing sizable balances in 401(k)s and similar plans, which will asure them a comfortable and relatively secure retirement income.For others, however, the 401(k) revolution has fallen short of its potential. click to download (352k)
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Retirement Saving and Long-Term Care Needs: An Overview
The nation is aging: The elderly population is expected to more than double by 2030. Yet many households - likely to be somewhere between one-quarter and one-half - are not saving adequately for income and health care needs during retirement. One of the difficult challenges in saving for retirement is the substantial uncertainty associated with long-term care, which can impose massive costs on those who have not insured against the risk. This overview paper documents trends affecting financial security during retirement; examines the financing of long-term care; and then explores the role of pension saving in preparing for financial needs, including long-term care.click to download (219k)
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The Saver's Credit: Issues and Options
This paper provides an overview of the rationale, history, and possible modifications to the Saver's Credit, which was enacted as part of the 2001 tax legislation. The tax system in general provides little incentive for participation in tax-preferred saving plans to households who most need to save more for retirement and who, if they do contribute, are most likely to use the accounts to raise net saving. By contrast, the tax code provides its strongest incentives to those who are generally already better prepared for retirement, and who are more likely to use tax-preferred vehicles as a shelter than as an opportunity to increase overall saving. The saver's credit helps to correct this "upside down" structure of tax incentives for retirement saving. click to download (508k)
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