Honda confirmed recently that it plans to explore retirement options for its workers in Ohio and across North America. The company, which employs 13,700 in Ohio, intends to offer lump-sum buyouts of employee pensions. Those who take early retirement before March 1st will receive a larger lump sum as well as higher retiree health insurance benefits for spouses than those who wait until after the deadline. Honda discontinued its pensions program for new employees last year, offering a 401(k) savings plan instead.
Lump sum payments have become something of a trend among large automakers. They are a way for companies to obtain “less volatility in their future payment streams,” says Olivia S. Mitchell, Professor of Insurance/Risk Management and Applied Economics/Policy, and Executive Director of the Wharton’s Pension Research Council at the University of Pennsylvania.
Read the full Columbus Dispatch story here.
Was your New Year’s resolution to tidy up your finances in 2014? Here it is almost March, and spring’s right around the corner – so how have you been doing in keeping your financial resolutions? Olivia S. Mitchell, Professor of Insurance/Risk Management and Applied Economics/Policy, and Executive Director of the Wharton’s Pension Research Council at the University of Pennsylvania, shares advice on how to pay your bills and still put enough money aside for retirement.
Find creative ways to motivate yourself to save. Text or email a friend every time you move closer to your goals.
Learn how you can make better financial decisions. Take advantage of free educational tools like our financial knowledge test.
Set up automatic bill payments. Contact your human resources department, and make sure you’re putting enough aside for retirement.
Make this year’s financial resolutions a habit and remain financially secure for years to come! Read the full Wall Street Journal article here
Established in 2006, Save for Retirement Week seeks to make employees more aware of how critical it is to save now for their financial future, to promote the benefits of starting to save for retirement today, and to encourage employees to take full advantage of their employer-sponsored plans by increasing their contributions. Mark Miller of Reuters also suggests adding more events to spotlight retirement preparation, such as Social Security Comprehension Week and Work Longer Week.
Prof. Olivia S. Mitchell, Executive Director of the PRC, speaks to Marketplace about the number of Boomer women leaving the workforce early. This is troubling, she says, because they are losing the chance to grow their Social Security payments: by staying in the workforce just one year longer, Boomers can boost their benefits by 8 percent. Read the story here.
Prof. Olivia S. Mitchell testified last week before the Senate Special Committee on Aging about ‘The Changing Face of Retirement Security in America’. Mitchell discussed her research on debt and financial illiteracy among the Baby Boomer generation, and how it is affecting Boomers’ retirement. Watch the video below, and read the complete testimony here.
Professor Olivia S. Mitchell, Director of Wharton’s Pension Research Council, recently discussed different types of retirement accounts with Marketplace’s Lizzie O’Leary. Regardless of what type of retirement plan you have, Mitchell notes that it’s important to save as much as you can, and start saving early. Saving 30-40% of your salary would be the best preparation for a retirement that might begin in your 60s and could last till age 100 or beyond. “The point is,” she adds, “the earlier you start saving, then the more time you have for that saving to compound. It’s absolutely critical.”
She also suggests that those still working consider moving to part-time positions in retirement, instead of bowing out of the workforce altogether. One reason is the extra income, and another is the likely health benefit – that is, when people retire very early, they tend to be in poorer health. Mitchell adds: “There’s a feedback effect between continuing to work longer and staying mentally and physically healthy.”
Professor Josh Rauh from Stanford is offering a free online class on public pensions that will educate the public on retirement planning and build understanding of the fiscal challenges facing public employee retirement systems. A group project will analyze a public sector pension system and provide a set of implementable policy strategies. Sign up here; class starts October 14.
PRC’s newest book will appear in November, edited by Olivia S. Mitchell and Kent Smetters. The volume illuminates the market for retirement financial advice, outlining regulatory developments and behavioral challenges to help consumers, plan sponsors, and regulators make more informed decisions. Experts examine what financial advisors do, what standards they uphold, and what their incentives are. Chapters also cover how people can be protected against bad advice, what constitutes good advice, and whether financial advice actually changes peoples’ financial habits. For more, see ThinkAdvisor’s overview; pre-order here from Oxford University Press.
Olivia S. Mitchell and Annamaria Lusardi presented their work on debt on the verge of retirement at the Retirement Research Consortium meeting last month. Presentations are available here.
In The Wall Street Journal, PRC Executive Director, Olivia S. Mitchell, discusses financial literacy among young adults, and how to encourage smart investing habits in teens. In a recent study, co-authored with Annamaria Lusardi and Vilsa Curto, Professor Mitchell found that only 25% of young adults (age 23-28) questioned were able to correctly answer questions about interest, inflation, and risk diversification.
“Young people need a better-equipped financial tool kit, to make a go of it in today’s complex financial markets,” she says. “Teaching financial literacy in the schools would help, and Wharton’s Knowledge@Wharton High School is one free source for teachers and students alike.”
Click here to read the WSJ piece. For more information about financial literacy, check out Knowledge@Wharton High School and the Financial Literacy Center.