RetireSecure Blog

April 21, 2014

Olivia S. Mitchell Joins Wharton Faculty on Twitter

Filed under: Uncategorized — The Pension Research Council @ 1:33 pm

Olivia S. Mitchell, Professor of Insurance/Risk Management and Applied Economics/Policy, and Director of Wharton’s Pension Research Council, joins the set of Wharton professors on Twitter. Follow Olivia on Twitter for the latest news stories on retirement planning, financial literacy, and more.

Click here to read the full story in the Daily Pennsylvanian.

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April 17, 2014

It’s Financial Literacy Month! The Perfect Time to Educate the Future

In their recent study, Olivia S. Mitchell, Professor of Insurance/Risk Management and Applied Economics/Policy, and Executive Director of the Wharton’s Pension Research Council at the Wharton School of the University of Pennsylvania, and Annamaria Lusardi of George Washington University, found that financial literacy is most pronounced among the young, women and the less-educated.

The inability to understand things like compounding interest rates, the importance of saving for retirement, or the cost of carrying credit card debt can have devastating lifetime effects. For instance, it can prevent someone from being able to borrow for a home or saving enough to retire. To celebrate Financial Literacy Month, join the Pension Research Council in promoting a strong foundation of financial education.

Click here to read their study.

Click here to visit the Pension Research Council’s Financial Literacy Center

Click here to read the full story in The Hill
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April 15, 2014

The Economic Importance of Financial Literacy: Theory and Evidence

Filed under: Financial Literacy,New Research,Uncategorized — The Pension Research Council @ 10:21 am

In their new review, Olivia S. Mitchell, Professor of Insurance/Risk Management and Applied Economics/Policy, and Executive Director of the Wharton’s Pension Research Council at the Wharton School of the University of Pennsylvania, and Annamaria Lusardi assess the rapidly growing body of economic research on financial literacy. Theoretical research sees financial knowledge as a form of investment in human capital, and many empirical surveys establish that people need to know much more to become informed. The authors show how financial literacy shapes economic outcomes. They conclude with thoughts on research needs to better inform theoretical and empirical models as well as public policy.

To read “The Economic Importance of Financial Literacy: Theory and Evidence” by Annamaria Lusardi and Olivia S. Mitchell, please click here.

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April 9, 2014

The Pension Research Council Welcomes the Vanguard Group as Senior Partner

Filed under: Uncategorized — The Pension Research Council @ 4:32 pm

The Pension Research Council is pleased to announce that the Vanguard Group has rejoined the Council as a Senior Partner of the Council for 2014. Read the full press release here.

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Exchanging Delayed Social Security Benefits for Lump Sums: Could This Incentivize Longer Work Careers? (Video)

Filed under: Uncategorized — The Pension Research Council @ 1:20 pm

Olivia S. Mitchell, Professor of Insurance/Risk Management and Applied Economics/Policy, and Executive Director of the Wharton’s Pension Research Council at the Wharton School of the University of Pennsylvania, discusses her paper “Exchanging Delayed Social Security Benefits for Lump Sums: Could This Incentivize Longer Work Careers?” written with coauthors Jingjing Chai, Raimond Maurer, and Ralph Rogalla. They are joined by discussant Maria Fitzpatrick, Associate Professor at Cornell University.

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April 4, 2014

Will There Be Life after Graduation? How to Manage Debt and Plan For Retirement from the Get-go

Filed under: Financial Literacy,Personal Finance,Planning for Retirement,Uncategorized — The Pension Research Council @ 3:11 pm

Many younger Americans find it hard to save while paying back student loan debt which stands at an all-time high, according to the USA Today. Olivia S. Mitchell, Professor of Insurance/Risk Management and Applied Economics/Policy, and Executive Director of the Wharton’s Pension Research Council at the Wharton School of the University of Pennsylvania, reminds these young adults that “it is important to get in the habit of ‘paying yourself first’ – that is, saving for retirement.This is particularly true if your employer offers a tax-qualified 401(k)-type plan with a match.”

The Vanguard Group reported that average retirement savings for those younger than age 25 was $3,900, which rose to $21,500 for Americans age 25-34. JP Morgan Asset Management recently released its yearly Guide to Retirement, where it reports that young adults must start saving for retirement right away.

Read the full USA Today College story here.

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March 25, 2014

Will Ruling in Detroit Bankruptcy Case Affect Rest of U.S.?

Filed under: PRC in the News,Uncategorized — The Pension Research Council @ 2:26 pm

“If I were a retired public-sector pensioner, I’d be worried today.” 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, was quoted as saying in the Los Angeles Times.

U.S. Bankruptcy Judge Steven Rhodes recently ruled that federal bankruptcy law preempts provisions in the state of Michigan which once were thought to protect public-sector pensions. Speaking about the ruling in Detroit, Mitchell said: “This is really the first time that there’s been a clear decision by a judge that, yes, pension promises are on the cutting board too.” This ruling could also pave the way for states with troubled pensions to avoid covering their pension promises. This ruling comes on the heels of a vote by Illinois legislators to cut back retiree cost-of-living adjustments to reduce pension costs.

Read the full Los Angeles Times article here.

March 20, 2014

The Success of 401(k)s

Filed under: Personal Finance,Planning for Retirement,Uncategorized — The Pension Research Council @ 11:28 am

The American Council of Life Insurers, American Benefits Council, and the Investment Company Institute recently released a report entitled Our Strong Retirement System: An American Success Story. The report argues that defined contribution plans have become a vital part of a robust retirement security system:

“In 1975 when the Employee Retirement Income Security Act took effect, household retirement assets were just over $27,000, adjusted for inflation. Now they are six times higher at nearly $168,000.”

Defined benefit plans have been waning in recent years while defined contribution (DC) plans continue to gain steam. 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, argues that these DC plans have been a success despite criticism by those who wish to revamp the current benefits system with government-backed programs. Ultimately, it is counterproductive, Mitchell argues, to discourage savings in tax deferred accounts in favor of immediate tax revenue:

“…Sooner or later the government gets the money back because when you withdraw the funds you pay income tax on them. They don’t take into account the fact that more saving now will generate more income later.”

There are many ways to help encourage retirement savings including proposals to have automatic 401(k)s or Australian-style pensions. Other ideas include “de-linking” 401(k) plans from employers to allow automatic payroll deduction into IRAs, like the Obama Administration’s 2014 MyRA plan.

Read the full ThinkAdvisor article here

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March 17, 2014

When to Start Thinking about Long Term Care Insurance

Filed under: Planning for Retirement,Uncategorized — The Pension Research Council @ 3:47 pm

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 why she dropped her supplemental term life insurance in favor of long term care insurance.

  • “…While it is difficult to find and expensive, going without felt much scarier. One year of nursing-home care in Pennsylvania, where I live, averages $100,000+; home health care can run $50,000 annually.” 
  • “…Don’t forget, a majority of people over age 65 will need nursing coverage at some time in their lives.” 
  • “…While you might not need LTC insurance at age 30, don’t wait too long, either.”

 Read the full Wall Street Journal article here

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March 14, 2014

Debt Threatens America’s Retirement Security

Filed under: New Research,Personal Finance,Planning for Retirement,Uncategorized — The Pension Research Council @ 9:17 am

According to HelloWallet, a DC based firm that offers technology-based financial advice, many Americans will face a decline in their standard of living when they retire. According to a report released by HelloWallet, the amount that Americans are allocating each month towards paying down their debt has increased by 69%. Households headed by people 55 to 64 spend 22% of their income paying off old loans.

  • “My work confirms that people are reaching the threshold of retirement much more in debt than in the past.” – 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 
  • “Individuals should consider their full balance sheet and financial picture, which for many households may mean saving for retirement through a 401(k) plan while also paying down student loans, taking out a mortgage to buy a house, or borrowing to send their children to college.” – Mike McNamee, chief public communications officer for the Investment Company Institute 
  • “We raised the victory flag as people increased retirement contributions, but in reality the ability of people to retire is a function of lots of different variables, most important of which is what they are doing on the other side of the ledger.” – Matt Fellowes, founder and chief executive of HellowWallet and a former Brookings Institution scholar

Read the full Washington Post story here

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