RetirementRevised

Here’s a wonky-sounding phrase: “asset location.”

But the meaning is simple - and important. Asset location refers to the type of accounts you use to hold investments in stocks, bonds and cash in order to reduce the drag of taxes. It’s something to consider during the years when you accumulate savings, and also after you retire and draw down funds.

Joining me on the podcast this week to explain asset location is Christine Benz, director of personal finance for Morningstar and senior columnist for Morningstar.com. In that role, Christine focuses on retirement and portfolio planning for individual investors. She also co-hosts Morningstar’s podcast The Long View, which features in-depth interviews with thought leaders in investing and personal finance.

The idea with asset location is that you’re being thoughtful about which types of assets you put in which types of accounts- tax-deferred, Roth and taxable accounts. The fit of these account types from a tax standpoint can make a difference in how much you keep or pay in taxes. It is one of the things about investing and saving that you can control, at least a bit - so it’s worth doing.

A key element of this is tax diversification during your accumulation phase - making sure you don’t have all of your assets in one basket. Most of us accumulate in 401(k) accounts, but Christine lays out ways to diversify along the way, such as using a Roth K option. Then, we shifted our discussion to what people who are near retirement, or already retired, can do to diversify.

Listen to the podcast by clicking the player icon at the top of this page. You also can find the podcast on Apple Podcasts, Spotify and Stitcher.

Watch: A chat about traditional Medicare versus Advantage

Speaking of Christine Benz and Morningstar, I stopped by there last week to chat with Christine about my recent New York Times column on the rising privatization of Medicare. Click here to view our conversation.

New guide: How to time your retirement

If you’re a paid subscriber to the newsletter, you know I’ve been publishing a series of guides on key retirement topics.

The latest was just issued last month - a guide on timing retirement decisions. This can be a really important inflection point for your financial success in retirement, so it’s worth thinking about carefully.

The guides are downloadable, quick reads, each paired with a podcast interview on the subject at hand. My aim is to create a series of just-in-time retirement education modules - read the guide, listen to the podcast and you’re good to go. The series already includes guides on claiming Social Security, transitioning to Medicare and how to hire a financial planner.

Becoming a subscriber is easy - to sign up, click the little green button at the bottom of the newsletter page, or visit my website to learn more. The subscription price is just $5 month, and you can cancel easily at any time if you’re not happy. Once you subscribe, you’ll have access to the entire retirement guide series, including this new one on retirement timing. Plus, you’ll get links to all the articles I publish for Reuters, The New York Times, Morningstar and Wealthmanagement.com. I also publish links to the most interesting new research in the field, and links to work by other journalists that I find compelling.

Finally, you’ll be supporting independent, unbiased journalism.

Thanks for listening - and I hope to see you over on the subscriber side soon!

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

Financial planners are sort of like money doctors - but what if your planner actually was a physician? That’s the unique biography of my guest on the podcast this week - Dr. Carolyn McClanahan. 

Carolyn is a physician turned financial planner. She became interested in planning when her husband inherited some money - and wanted to make some career moves that would require him to accept a lower income. The couple set out to find some financial planning help, but they were dissatisfied by what they found.

One thing led to another, and these days Dr. McClanahan runs her own financial planning practice in Florida, called Life Planning Partners. She also has emerged as a leader in the planning profession, in part because of her unusual blend of professional expertise. Carolyn speaks and writes regularly at conferences and writes for Forbes and Financial Planning Magazine. You can find her quoted regularly in the Washington Post, New York Times, CNBC, and NPR; I have turned to her for insights in plenty of stories I’ve written in recent years. Dr. McClanahan brings a fresh, provocative perspective to a range of topics where health and financial issues intersect - everything from chronic illness to end of life, long term care, health care reform, and health care costs. 

I asked Carolyn to tell the story of her unusual journey from practicing medicine to providing financial advice. We also talked about how the financial planning field has changed over the past two decades, how she thinks about health - and health care expenses - in the context of retirement plans, and how to select Medicare plans. Finally, I asked Dr. McClanahan for her thoughts on health care reform and proposals for Medicare for All.

Listen to my conversation with Carolyn McClanahan by clicking the player icon at the top of the newsletter. You also can access the podcast on Apple Podcasts, Spotify and Stitcher.

New guide: How to time your retirement

If you’re a paid subscriber to the newsletter, you know I’ve been publishing a series of guides on key retirement topics.

The latest was just issued last week - a guide on timing retirement decisions. This can be a really important inflection point for your financial success in retirement, so it’s worth thinking about carefully.

The last years of work usually are peak earning years. And working even a few years more years - or less - will impact your retirement math significantly. Your timing affects the number of years that you’ll rely on savings to meet living expenses. It impacts the number of years that you can contribute to retirement saving accounts. And perhaps most important, working longer helps sets the stage for a delayed Social Security claim. That’s because it provides the income you need to meet living expenses while you wait to file.

But setting a retirement target date and sticking to it can be very difficult . . . even risky.

About one-third of workers tell pollsters they plan to work well past traditional retirement age, or not retire at all. But the data also tell us that about one-third of workers retire earlier than expected - and that the farther out you push your target date, the less likely you are to work to that date.

The most common causes for unexpected early retirement are health problems and job loss. But the study uncovered clear reasons for unplanned early retirement only in about one-quarter of cases.

Other reasons are more difficult to measure. The pull of leisure activities and time with family are factors, along with possible age discrimination. But the quality of work also matters.

The guides are downloadable, quick reads, each paired with a podcast interview on the subject at hand. My aim is to create a series of just-in-time retirement education modules - read the guide, listen to the podcast and you’re good to go. The series already includes guides on claiming Social Security, transitioning to Medicare and how to hire a financial planner.

Becoming a subscriber is easy - to sign up, click the little green button at the bottom of the newsletter page, or visit my website to learn more. The subscription price is just $5 month, and you can cancel easily at any time if you’re not happy. Once you subscribe, you’ll have access to the entire retirement guide series, including this new one on retirement timing. Plus, you’ll get links to all the articles I publish for Reuters, The New York Times, Morningstar and Wealthmanagement.com. I also publish links to the most interesting new research in the field, and links to work by other journalists that I find compelling.

Finally, you’ll be supporting independent, unbiased journalism.

Thanks for listening - and I hope to see you over on the subscriber side soon.

Can you pass this Social Security quiz?

My column for WealthManagement.com this month is a quick, fun quiz on Social Security basics. It’s written with financial planners in mind, but I encourage everyone to take a spin and see how you do. Among the questions:

* Everyone’s working longer—right? So, what is the average age that Americans file for Social Security?

* What’s the better deal—filing for Social Security early or delaying a claim past full retirement age (FRA)?

* Are the pre-FRA reductions equal to the post-FRA credits?

* Will your Social Security retirement benefits replace the same amount of pre-retirement income for my clients in 2035 as they do today?

Good luck!

Where else can you find the podcast?

The podcast always is embedded in the newsletter (free and for subscribes). You also can find it on several of the most popular podcast platforms, including Apple Podcasts, Spotify and Stitcher.

If you do subscribe there, please leave a rating and comment to let me know what you think - it’s an easy way to help build the program’s audience.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

The podcast is a bit shorter than usual this week - on this special, brief edition, I’m rolling out my latest retirement guide. This one focuses on the issues surrounding the timing of retirement.

If you’re a subscriber to the newsletter, you know I’ve been publishing the guides on a regular basis. These are downloadable, quick reads paired with a podcast interview on the subject at hand. My aim is to create a series of just-in-time retirement education modules - read the guide, listen to the podcast and you’re good to go. The series already includes guides on claiming Social Security, transitioning to Medicare and how to hire a financial planner.

Becoming a subscriber is easy - to sign up, click the little green button at the bottom of the newsletter page, or visit my website to learn more. The subscription pricce is just $5 month, and you can cancel easily at any time if you’re not happy. Once you subscribe, you’ll have access to the entire retirement guide series, including this new one on retirement timing. Plus, you’ll get links to all the articles I publish for Reuters, The New York Times, Morningstar and Wealthmanagement.com. I also publish links to the most interesting new research in the field, and links to work by other journalists that I find compelling.

Finally, you’ll be supporting independent, unbiased journalism.

Why a guide on the timing of retirement decisions? Simply put, this can be a really important inflection point for your financial success in retirement, so it’s worth thinking about carefully.

The last years of work usually are peak earning years. And working even a few years more years - or less - will impact your retirement math significantly. Your timing affects the number of years that you’ll rely on savings to meet living expenses. It impacts the number of years that you can contribute to retirement saving accounts. And perhaps most important, working longer helps sets the stage for a delayed Social Security claim. That’s because it provides the income you need to meet living expenses while you wait to file.

But setting a retirement target date and sticking to it can be very difficult . . . even risky.

About one-third of workers tell pollsters they plan to work well past traditional retirement age, or not retire at all. But the data also tell us that about one-third of workers retire earlier than expected - and that the farther out you push your target date, the less likely you are to work to that date.

The most common causes for unexpected early retirement are health problems and job loss. But the study uncovered clear reasons for unplanned early retirement only in about one-quarter of cases.

Other reasons are more difficult to measure. The pull of leisure activities and time with family are factors, along with possible age discrimination. But the quality of work also matters.

In this podcast, I talk with several career experts on how to best navigate the job market and control your employment destiny.

Thanks for listening - and I hope to see you over on the subscriber side soon.

Is government tipping the scales in favor of Medicare Advantage?

Medicare Advantage is growing quickly — enrollment is expected to jump to 47 percent in 2029 from 34 percent this year, according to a Kaiser analysis of Congressional Budget Office projections.

Some of the growth stems from heavy investment by health insurance companies in geographic expansion and marketing via television and direct mail. Moreover, the industry points to high rates of consumer satisfaction with Advantage plans.

But the rise of Advantage also has been aided by changes in federal law and regulation over the past two decades that favor the program. And under the Trump administrations, critics say, Medicare’s administrators have been tipping the scales improperly in favor of Advantage.

Advantage’s growth has occurred without much debate in the public policy arena about the effects of such large-scale privatization on the long-range health outcomes for patients such as Mr. Stein, and on the costs to both government and enrollees.

This weekend in The New York Times, I examine whether government is tipping the scales improperly in favor of Medicare Advantage.

Other recommended reading this week

Strategies to mitigate the (partial) death of the stretch IRA . . . Steps women can take to improve their retirement outlook . . . A closer look at the Democratic Presidential candidates’ long-term care plans.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

Remember the phrase “greedy geezers?” That was former Wyoming Senator Alan Simpson’s memorable description back in 2012 of seniors who receive  Social Security. Simpson was co-chair back then of a bipartisan presidential commission on how to cut the federal deficit. The commission had recommended cuts to Social Security benefits as part of its deficit solution. That prompted a bit of a verbal firefight between Simpson - who always is colorful with his language - and advocates for seniors. Simpson called one seniors’ group nothing  more than “greedy geezers” stealing from young people “who are going to get gutted.”

It was a good example of the colorful language of so-called “inter-generational warfare” -- pitting generations against one another with divisive zero-sum-game economic arguments.

That kind of rhetoric might be useful for some politicians, but it is economic nonsense. Families don’t live in economic silos, separated from one another, and some recent evidence shows that a large segment of the senior population is anything but greedy. In fact, they are struggling to meet basic living expenses - and the economic pain filters down to younger family members.

Consider a recent survey by AARP that found one-third of midlife adults with at least one living parent provide financial support to them. More than half provided $1,000 or more to their parents in the last year. Within that group, 34% provided up to $5,000, and 13% as much as $10,000.

The support goes mainly to help meet living expenses, such as groceries and medical costs.

These figures really are just the tip of the iceberg. A deeper dive into the data on elders and poverty show that the number of older households coping with financial stress is much larger than typically understood.

Joining me on the podcast this week to explore this is Jan Mutchler. She’s a professor of gerontology at the University of Massachusetts Boston. She works with the university’s Gerontology Institute, which produces something called the Elder Index. The index measures the cost of living for older people, looking at their typical budgets and income, adjusted for regional variations.

If you live below the Index, it means you don’t have the resources needed to meet basic living needs. The institute recently released new data for 2019, and it shows that half of Americans over age 65 living alone have incomes that are below the index . . .and the comparable figure for couples is 23%.

Those figures are shocking, and they are much more dire than the federal measure of poverty that are used to establish eligibility for many state and federal assistance programs. 

I talked with Jan about what drives these numbers, and what needs to be done to drive them down.

Listen to the podcast by clicking the player icon at the top of this page. The podcast also can be found on Apple Podcasts, Spotify and Stitcher.

Subscribe now!

This is a listener-supported project, so please consider subscribing.

The podcast is part of the subscription RetirementRevised newsletter. Subscribers have access to all the podcasts, plus my weekly summary and analysis of key developments in retirement.

Subscribers also have access to my series of retirement guides on key challenges in retirement. Each guide is paired with a podcast interview with an expert on the topic; the series already covers Social Security claiming and the transition to Medicare, and how to hire a financial planner. The most recent looks at the critical decision between Original Medicare and Medicare Advantage.

You can subscribe by clicking the little green “subscribe now” link at the bottom of this page, or by visiting RetirementRevised.com. And if you’re listening on Apple Podcasts, Spotify or Stitcher, I hope you’ll leave a review and comment to let me know what you think.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

You’ve probably heard plenty of advice over the years about the benefits of working longer and delaying retirement. I write about this often, and I do believe it can be one of the best strategies for improving your retirement outlook. Working longer can help pay for living expenses while you wait to claim Social Security, boosting your annual benefits. It also can mean a few more years of retirement saving - and fewer years relying on savings.

But working longer isn’t always an easy thing to pull off. Research shows that about half the time, job loss, health problems or just plain burnout push people out of the workforce sooner than they expected. 

On today’s podcast, we explore that last point - burnout. . . and how to go about adjusting your mindset about work toward the end of your career. The key elements of success include expanding your horizons, being flexible and open to changing your mindset about what kind of work is possible and satisfying.

One of my guests today has a great deal of interesting guidance to offer on this topic, because he’s a career coach, and he also operates Career Pivot, an online network for people navigating careers in the second half of life. Marc also has a terrific book, Repurpose Your Life, and he also hosts a podcast that carries the same name as his book. That’s the good news. Here’s the bad: his name is Marc Miller. I kid you not - on this podcast, Mark Miller interviews Marc Miller. So it goes - just try to follow the bouncing ball.

Also joining me is Russ Eanes. Russ worked for several decades in the book publishing business, and also has worked as a minister in the Mennonite Church. Around the time that he turned 60, Russ decided to bail out of his job after tiring of the tumultuous changes hitting the publishing world. He felt that his effectiveness on the job was falling, and he was getting very unhappy with all the downsizing of colleagues that he was being asked to do by his employer.

Then, a couple major life events shocked Russ into taking action that included a year-long sabbatical and a 500-mile trek on the Camino De Santiago in Spain, which is the subject of his recent book. Russ recently transitioned his career to full-time freelance work as a writer, editor and consultant in publishing. He also is a member of Marc Miller’s Career Pivot network.

Speaking of his book - if you live in Virginia, check out upcoming speaking appearances Russ will be doing on February 11th and 12th in and around Harrisonburg and Crozet.

Listen to the podcast by clicking the player icon at the top of this newsletter. You also can find the podcast on Apple Podcasts, Spotify and Stitcher.

Where do the presidential candidates stand on Social Security?

Heading into the debate in New Hampshire tonight, Social Security has not been a topic in any of the presidential forums. But no topic is more important to the well-being of today’s older voters - and younger workers who will rely on the program down the road.

This weekend in The New York Times, I examine where the major candidates stand on Social Security reform. All of the Democrats’ proposals include a fix for the program’s looming financial shortfall. The combined trust funds for Social Security’s retirement and disability programs are on course to be depleted in 2035; without changes, funding from payroll tax receipts will be sufficient to pay only 80 percent of currently scheduled benefits.

But all of the Democratic candidates go further than that, proposing expanded benefits - either across the board or targeted for vulnerable seniors.

Meanwhile, President Trump broke with Republican party orthodoxy on Social Security as a candidate in 2016, promising to oppose benefit cuts. And he reiterated that pledge in this week’s State of the Union address. But Democrats argue that one recent statement by the president signaled his openness to considering reduction.

And he provoked attacks from Democrats just last month following a CNBC interview at the recent World Economic Forum in Davos, Switzerland. Asked if entitlements will “ever be on your plate”, Mr. Trump replied that “at some point they will be.” Democratic candidates and Social Security advocates pointed to the exchange as evidence Mr. Trump would seek cuts to Social Security - and Medicare - in a second term.

To learn more, check out my “Retiring” column in The New York Times this weekend.

Subscribe now!

This is a listener-supported project, so please consider subscribing.

The podcast is part of the subscription RetirementRevised newsletter. Subscribers have access to all the podcasts, plus my series of retirement guides on key challenges in retirement. Each guide is paired with a podcast interview with an expert on the topic; the series already covers Social Security claiming and the transition to Medicare, and how to hire a financial planner. The most recent looks at the critical decision between Original Medicare and Medicare Advantage.

Readers also get my weekly summary and analysis of key developments in retirement. This week, you’ll learn about several new reports on trends in longevity, how the new SECURE Act is impacting estate plans, and whether the coverage gap in Medicare Part D (the donut hole) has really closed.

You can subscribe by clicking the little green “subscribe now” link at the bottom of this page, or by visiting RetirementRevised.com. And if you’re listening on Apple Podcasts, Spotify or Stitcher, I hope you’ll leave a review and comment to let me know what you think.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

Congress passed important retirement legislation just before the holidays that has sent financial planners and tax professionals scrambling, because the law's impact on people with significant retirement savings is nearly immediate.

The SECURE ACT will have an important impact on the estate plans of people with large tax-deferred IRAs (often rolled over from 401k accounts). It eliminates the so-called "stretch" IRA, which allowed non-spouse beneficiaries to draw down inherited tax-deferred accounts over the course of their lifetimes. Heirs will now be required to draw down the entire account amounts within a 10-year window--a change that will have negative tax and financial-planning consequences in many cases.

Joining me on the podcast to talk about the changes - and how you can respond with some smart planning moves - is one of the nation’s best-known experts on IRAs. Ed Slott is known well to millions of public television viewers through his tv specials, and he’s also a best-selling author. His next book, Ed Slott's Retirement Decisions Guide: 2020 Edition, will be published early this year; his most recent public television special is Retire Safe & Secure! With Ed Slott.

Ed’s company provides IRA training to financial professionals, CPAs and attorneys, and his website offers free educational resources to consumers.

Listen to the podcast by clicking the player icon at the top of the newsletter page. Or, you can find the program on Apple Podcasts, Spotify and Stitcher.

Subscribe now!

This is a listener-supported project, so please consider subscribing.

The podcast is part of the subscription RetirementRevised newsletter. Subscribers have access to all the podcasts, plus my series of retirement guides on key challenges in retirement. Each guide is paired with a podcast interview with an expert on the topic; the series already covers Social Security claiming and the transition to Medicare, and how to hire a financial planner. The most recent looks at the critical decision between Original Medicare and Medicare Advantage.

Readers also get my weekly summary and analysis of key developments in retirement. This week, you’ll learn about several new reports on trends in longevity, how the new SECURE Act is impacting estate plans, and whether the coverage gap in Medicare Part D (the donut hole) has really closed.

You can subscribe by clicking the little green “subscribe now” link at the bottom of this page, or by visiting RetirementRevised.com. And if you’re listening on Apple Podcasts, Spotify or Stitcher, I hope you’ll leave a review and comment to let me know what you think.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

We’ve been devoting time on the podcast lately to rising retirement inequality in America. One part of this story that doesn’t get much attention is the role of traditional pensions in equalizing retirement outcomes - and my guest this week has plenty to say on that topic.

Monique Morrissey is an economist specializing in retirement security and financial markets at the Economic Policy Institute in Washington. EPI has made its mark as the premier think tank in D.C. focused on the economic condition of low- and middle-income Americans. Notably nearly 30 percent of its support comes from organized labor, which makes it a little different than the typical Washington think tank.

Morrissey recently published a research brief focusing on ways that the shift away from traditional pensions, and toward 401ks, has increased the gaps in retirement readiness based on income, race, education and marital status. The brief make its case through a series of charts based on Federal Reserve data, accompanied by commentary. It paints a troubling picture. 

Morrissey argues that the shift away from pensions has been disastrous for low income people, blacks, Hispanics and single workers, and people without college degrees. But more affluent households often don’t have adequate retirement savings or benefits either - and women are much more vulnerable in retirement due to their lower lifetime earnings and longer life expectancy.

More than twice as many families have defined contribution plans as defined benefit pensions, but participation in pensions is more equal across education, race, and income groups. she found:

Pensions are concentrated mostly in the public sector these days, but overall about one in five workers still does participate in these plans, she finds. For those workers, retirement income is distributed more evenly because of the universal participation - and the fact that benefit credits accrue automatically, no matter your level of contribution.

Morrissey argues that that our current retirement system does not work for most workers. As a result, we need to preserve and expand Social Security, defend defined benefit pensions for workers who have them, and find new solutions for those who do not.

To listen to my interview with Monique Morrissey, click the player icon at the top of this newsletter.

The podcast also can be found on Apple Podcasts, Spotify and Stitcher.

Subscribe now!

This is a listener-supported project, so please consider subscribing.

The podcast is part of the subscription RetirementRevised newsletter. Subscribers have access to all the podcasts, plus my series of retirement guides on key challenges in retirement. Each guide is paired with a podcast interview with an expert on the topic; the series already covers Social Security claiming and the transition to Medicare, and how to hire a financial planner. The most recent looks at the critical decision between Original Medicare and Medicare Advantage.

Readers also get my weekly summary and analysis of key developments in retirement. This week, you’ll learn about several new reports on trends in longevity, how the new SECURE Act is impacting estate plans, and whether the coverage gap in Medicare Part D (the donut hole) has really closed.

You can subscribe by clicking the little green “subscribe now” link at the bottom of this page, or by visiting RetirementRevised.com. And if you’re listening on Apple Podcasts, Spotify or Stitcher, I hope you’ll leave a review and comment to let me know what you think.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

This week, we dig into one of the hottest topics in the investing world - how to do well by doing good. Sustainable investing has been growing rapidly over the past few years, but most of the action thus far has been among institutional and high-net worth investors. Here’s what I have been wondering: when will this break into the world of retirement investing?

My guest on the podcast is an expert on social investing - Meg Voorhes, director of research for US SIF: The Forum for Sustainable and Responsible Investment. Meg leads the production of US SIF’s biennial, flagship report, Sustainable and Responsible Investing Trends in the United States.

I wrote on the topic of social investing last fall for The New York Times. Broadly speaking, this category includes any investing motivated by a social purpose. The first waves came back during the 1960s era of shareholder activism, divestment initiatives and impact investing. The early fund offerings often focused on a single, narrow area of investments, or only on exclusion of specific investment categories, such as fossil fuels. More recently, we’ve seen the advent of funds that screen for environmental, social and governance factors — so-called E.S.G. investing. Most E.S.G. mutual funds rely on ratings systems that score securities for their exposure to indirect financial factors, including a company’s environmental impact, governance policies or how it treats employees or monitors its supply chains. The funds either underweight or eliminate securities that fund managers expect to have high risk associated with those factors, or tilt toward those that an investor believes will have a positive impact.

Morningstar reported this week that U.S. sustainable funds attracted new assets at a record pace in 2019. Estimated net flows into open-end and exchange-traded sustainable funds totaled $20.6 billion for the year; that's nearly four times the previous annual record for net flows set in 2018.

When will sustainable investing to start popping up in 401k plans? That question intrigues me for a couple reasons. First, I think sustainable investing is a great way for the market to signal to corporations that they must improve their performance on things like climate change, workforce diversity and management and general social responsibility. Making social investing options available inside 401k plans would be a very good thing, because this is where average investors have their money parked. And, there’s a lot of it - $8.5 trillion is sitting in in 401ks; by comparison, all sustainable investing amounts to just over $12 trillion. 

Surveys show that workplace retirement savers are very interested in using their retirement savings to make the world better in areas like climate, gun control, tobacco abatement and reproductive rights. A Morningstar study published last year found that more than 70 percent of the United States population has “at least a moderate interest” in sustainable investing. The appetite is especially strong among younger workers: A Natixis survey of 401(k) plan participants last year found that 67 percent of millennials would be more likely to contribute, or increase their plan contributions, if they knew their investments were contributing to social good.

But less than 5 percent of 401k plans include sustainable mutual fund choices, and they hold less than 1 percent of total plan assets.

There are several important reasons for this. Retirement plan sponsors are required by law to offer investment choices that produce the best financial results for plan participants. That’s their fiduciary duty. A case is starting to build that you can, in fact, have your cake and eat it too - studies by Morningstar are finding that sustainable investing choices do as well as standard investments, and in some cases better. But that message is just starting to find its way into conversations with plan sponsors. And the guidance on this topic from regulators has anything but clear.

Then there are the facts on the ground in terms of how 401k plans are evolving. 401ks are very much the domain of target date funds these days. These are funds that automatically adjust your investment balance as you get closer to retirement, and they usually are composed of passive, very broad-based index funds. Vanguard projects that by 2023, 70% of participants in plans that it administers will be using target date series. So that statistic tells you everything you need to know here - if sustainable investing is going to take off, it needs to be blended into target date series.

That’s starting to happen, as I noted in my New York Times story. Ron Lieber, who writes the Your Money column at the Times, added another interesting perspective last week with a story examining what 401k participants can do to push their employers to add socially-responsible investment options to their plan menus.

I asked Meg to talk about what needs to happen next for sustainable retirement investing to get off the ground.

To listen to our conversation, click on the player icon at the top of this page. You also can access the podcast on Apple Podcasts, Spotify and Stitcher.

Subscribe now!

This is a listener-supported project, so please consider subscribing.

The podcast is part of the subscription RetirementRevised newsletter. Subscribers have access to all the podcasts, plus my series of retirement guides on key challenges in retirement. Each guide is paired with a podcast interview with an expert on the topic; the series already covers Social Security claiming and the transition to Medicare, and how to hire a financial planner. The most recent looks at the critical decision between Original Medicare and Medicare Advantage.

Readers also get my weekly summary and analysis of key developments in retirement. This week, it includes analysis of the latest polling of voters on Medicare for All, why we’re headed for a severe shortage of geriatricians to care for the elderly and an ill-advised plan to let ordinary retirement savers invest in risky private equity deals.

You can subscribe by clicking the little green “subscribe now” link at the bottom of this page, or by visiting RetirementRevised.com. And if you’re listening on Apple Podcasts, Spotify or Stitcher, I hope you’ll leave a review and comment to let me know what you think.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

This week on the podcast, we update some important developments out of Washington related to retirement that occurred just before the holidays.

Congress wrapped up the year passing a massive $1.4 trillion omnibus spending bill. Usually with legislation like this, a lot of unrelated legislation gets tacked on and moved through, and this was no exception.

One important piece of legislation was included in the bill - and another was not.

The bill that did pass is called the SECURE Act. It’s a grab-bag of retirement policy ideas that have been bouncing around Washington for a number of years. But it is important because it’s the only piece of significant retirement legislation to be passed in Washington since 2006, when the Pension Protection Act was signed into law. Laws like this really do make a difference over time. The PPA ushered in some major positive changes like the widespread adoption of target date funds and automatic enrollment of new workers in retirement plans.

My guest on the podcast this week will talk with us about what’s good about this bill from a financial services industry perspective. Melissa Kahn is managing director of retirement policy for the defined contribution team at State Street Global Advisors. She is an attorney with extensive experience in the world of employee benefits and regulation. Before joining State Street, she worked as a consultant in the industry and also for more than a decade working in the life insurance business. So she is going to give us a good idea of the arguments the industry has mounted in favor of this bill. 

There really are two keys things to know about this law. First, it clears the way for a new type of 401k plan aimed at making it easier for small employers to offer retirement plans to workers. They are called open multiple employer plans - or MEPs for short. Small businesses are the least likely to offer plans, so the idea here is that small employers can join plans that would be offered by private plan custodians, like a Fidelity, Vanguard or Schwab. The hope is that small businesses will be enticed by low costs and streamlined paperwork, and an increased tax credit to cover their setup costs.  The jury is out on whether that will really happen. I’ve written a number of stories on open MEPs over the last year or two and will include links to them in the subscriber edition of the newsletter this week.

Second, the SECURE Act contains a provision that makes it easier for 401k plans to offer annuities. It creates a so-called “safe harbor” that protects plan sponsors from legal liability if anything goes wrong with the insurance  company offering the annuity. Instead, it relies on state insurance regulators to certify the safety of the annuity provider.

This is really where the SECURE ACT got its push - the insurance lobby has been salivating over this for years and wanted to see it get done.

Don’t get me wrong - a serious case can be made for some people to use annuities in retirement. But they’re not right for everyone. One worry here is whether there will be enough education for 401k participants on annuities, when to use them and how. Another major concern: what type of annuities will be offered? Consumer advocates urged Congress to limit the safe harbor in SECURE to cover only simple income annuities. They argued against including things like fixed-index and variable annuities are too complex and confusing for regulators to police, and for participants to understand. They lost on that point.

I do think we’re going to see a big push by the companies that administer plans to get annuities into workplace plans. Employers probably will take a conservative approach to it. But we’re already starting to see new products start to take shape, like target date funds with annuities built in. Expect to see more of that.

The SECURE Act also includes a couple other significant changes. It boosts the age when you need to start taking required minimum distributions from tax deferred accounts from 70 and a half to 72 and a half. And it phases out the use of stretch, or inherited IRAs. That last one has important implications for people with large tax-deferred accounts who hope to pass those assets on to heirs. (I’m working on a separate story about that which will be published soon.)

The second thing I wanted to mention about the omnibus spending bill is something that didn’t make it into the legislation. That is a fix for the looming meltdown in multiemployer pensions. Don’t confuse this with the multiple employer plans I just mentioned. This is very different. These are traditional pension plans created under collective bargaining agreements by groups of employers in industries like construction, trucking, mining and food retailing.

More than 100 multiemployer plans covering 1.4 million workers and retirees are underfunded and sponsors have told regulators and participants that they could fail within the next 20 years. The problem is worsening, but Democrats and Republicans in Congress haven’t been able to come up with a plan they can agree on. House Democrats passed a plan last July built around providing low-interest loans to struggling plans. But the Senate has a very different plan. It increases the insurance premiums that plan sponsors pay into the system, and adds new premiums that would be paid by retirees as well, which would effectively act as a benefit cut. It also contains reforms to the discount rate assumptions plans use to project the future health of plans. 

So Congress is stuck, and by one analysis 44 plans will fail by 2025. They did manage to come up with a bailout for one fund that is on track to fail by 2022 - which is sponsored by the United Mine Workers of America plan. Having a powerful friend like Senate Majority Leader Mitch McConnell - from a big coal producing state - didn’t hurt in getting that done.

To hear my interview with Melissa Kahn, click the player icon at the top of the page. One word about this - we taped this discussion just before the holidays, as the Secure Act was headed for passage, so you’ll hear some discussion along that line at the start of our conversation.

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The podcast is part of the subscription RetirementRevised newsletter. Subscribers have access to all the podcasts, plus my series of retirement guides on key challenges in retirement. Each guide is paired with a podcast interview with an expert on the topic; the series already covers Social Security claiming and the transition to Medicare, and how to hire a financial planner. The most recent looks at the critical decision between Original Medicare and Medicare Advantage.

Readers also get my weekly summary and analysis of key developments in retirement. This week, it includes analysis of the latest polling of voters on Medicare for All, why we’re headed for a severe shortage of geriatricians to care for the elderly and an ill-advised plan to let ordinary retirement savers invest in risky private equity deals.

You can subscribe by clicking the little green “subscribe now” link at the bottom of this page, or by visiting RetirementRevised.com. And if you’re listening on Apple Podcasts, Spotify or Stitcher, I hope you’ll leave a review and comment to let me know what you think.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

This week, a panel of outstanding journalists joins me on the podcast to talk about how retirement has changed during the decade now ending. The topic has been on my mind lately, as I published a story in The New York Times last weekend examining the changes we’ve seen since 2010, when the economy was just beginning to recover from the financial crash and Great Recession.

Joining me are three colleagues on the aging beat:

* Judy Graham, who writes the Navigating Aging column for Kaiser Health News. Judy was was a senior health correspondent for many years at the Chicago Tribune, and has written for the New York Times, Washington Post and Los Angeles Times, among many other publications.

* Chris Farrell, senior economics contributor at Marketplace, American Public Media’s nationally syndicated public radio business and economic program. Chris also is an economics commentator for Minnesota Public Radio. His most recent book is Purpose and a Paycheck: Finding Meaning, Money, and Happiness is the Second Half of Life.

* Richard Eisenberg, Managing Editor of Next Avenue, the public media site for people 50+, where he is also editor of its Money & Policy and Work & Purpose channels. Previously, Rich was Executive Editor of Money magazine, Front Page Finance Editor at Yahoo! and Special Projects Editor/Money Editor at Good Housekeeping. He is the author of the books How to Avoid a Midlife Financial Crisis and The Money Book of Personal Finance.

Reporting and writing the Times article prompted some reflection. I began to cover retirement just before the recession, and my first book, The Hard Times Guide to Retirement Security (2010) was published in the depths of the downturn. Those first few years on the beat, my reporting was very focused on the wreckage - the unemployment rate was high, the stock market was coming back and millions of workers were worried that their retirement plans were ruined.

How are we doing now? It’s a very mixed bag. The Times story considers the state of retirement security from the standpoint of saving and investing, health insurance, employment, housing and Social Security. The key finding:

Retirement in America has become a tale of two very different realities in the decade now drawing to a close.

In 2010, the economy was just beginning to recover from the worst recession and financial crisis in recent memory. The unemployment rate was high, the stock market was coming back and millions of workers were worried that their retirement plans were ruined.

Since then, a robust economic rebound has put some Americans back on solid footing for retirement, but progress has been uneven. Despite the gains made in employment, wage growth has only recently begun to recover — and remained flat for older workers. Retirement wealth has accumulated almost exclusively among higher-income households, while middle- and lower-income households have only held steady or lost ground, Federal Reserve data shows.

Trends in Social Security and Medicare also are troubling. The value of Social Security benefits — measured by the share of pre-retirement income they replace — is falling, and the cost of Medicare is rising.

Some of the most striking data comes from the Employee Benefit Research Institute, which has developed a model that simulates the percentage of households likely to have adequate resources to meet retirement expenses. The model considers household savings, home equity and income from Social Security and pensions.

The model shows that the highest-income households have seen their odds of a successful retirement improve sharply during this decade, and they have very high odds of success. Middle-income households, meanwhile, have seen some gains, but still have only 50-50 odds of success. And the lowest-income households have seen their retirement prospects diminish sharply.

This chart depicts the odds for boomers age 55-64 - the color bars represent different income quartiles (blue is lowest, yellow is highest). In 2019, the highest income households have a 93% chance of a successful retirement - up substantially since 2010, while the lowest had odds of just 11% - down substantially over that period.

This chart depicts the same divergent trend among GenXers:

A few things that I had hoped to discuss in the article wound up on the cutting room floor for space reasons, so I’ll mention them briefly here:

Consumer protection: The crash gave birth to the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010, which called for sweeping reforms to financial regulation — including financial advice on retirement.

Dodd-Frank included language encouraging the Securities and Exchange Commission to adopt a uniform standard of fiduciary responsibility for brokers and advisers.

“That was the point when it seemed possible we’d soon have a strong standard of conduct across the broad range of investment advice for retail investors to be protected in retirement plans,” said Barbara Roper, director of investor protection for the Consumer Federation of America.

It wasn’t to be.

When the S.E.C. failed to act promptly, the Obama-era Department of Labor adopted its own fiduciary rule governing retirement accounts. That rule died in 2018 when courts sided with opponents in the financial services and insurance industries, ruling that the department had overstepped its authority. The Securities and Exchange Commission completed work this year on its so-called Regulation Best Interest, which defines standards for brokers who sell investment products and explains the duties of investment advisers who provide financial guidance. Many critics regard the S.E.C. regulation as too weak, relying too heavily on disclosure to clients of any conflicts of interest.

“One of the things that has really taken people by surprise in the S.E.C. rule is the degree to which they have adopted the weakest possible interpretation of the obligations investment advisers have as fiduciaries,” Ms. Roper said.

Shifting Social Security politics: The political debate about how to solve Social Security’s long-range financial shortfall shifted significantly during the decade.

In 2010, the bipartisan Bowles-Simpson presidential commission recommended changes that included further increases in the retirement age, a less generous cost-of-living adjustment and means testing for high-income workers.

In 2019, Democrats’ plans are built around higher taxes and expanded benefits — and President Trump campaigned in 2016 promising to oppose benefit cuts.

“The shift in the Democratic Party has been dramatic,” says Nancy Altman, president of Social Security Works, an advocacy group. “In contrast, the Republicans haven’t changed. They still want cuts and they still want to avoid accountability for those cuts.”

Subscribe now!

This is a listener-supported project, so please consider subscribing.

The podcast is part of the subscription RetirementRevised newsletter. Subscribers have access to all the podcasts, plus my series of retirement guides on key challenges in retirement. Each guide is paired with a podcast interview with an expert on the topic; the series already covers Social Security claiming and the transition to Medicare, and how to hire a financial planner. The most recent looks at the critical decision between Original Medicare and Medicare Advantage.

You can subscribe by clicking the little green “subscribe now” link at the bottom of this page, or by visiting RetirementRevised.com. And if you’re listening on Apple Podcasts, Spotify or Stitcher, I hope you’ll leave a review and comment to let me know what you think.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com