Welcome to the latest edition of This Week in Pensions! This is the news you need to know in the fight for a secure retirement. We have gathered the best stories about pensions and retirement security from the previous week.
Did you know that Major League Baseball players receive a pension? Check out our latest blog about MLB’s long history of retirement security.
A recent report by the Insured Retirement Institute revealed that 45% of Baby Boomers–those born between 1946 and 1964–have no retirement savings. This means that almost half of Baby Boomers do not have enough money to sustain themselves throughout their retirement years, which can be a significant challenge for many people. For the 55% of Boomers with retirement savings, the median amount is only $152,000, which is likely not enough to sustain them for their retirement. Many boomers underestimate the cost of retirement, which, as we’ve covered, comes at an extensive price. However, a previous report from the National Institute on Retirement Security (NIRS) shows that Boomers aren’t the only ones lagging in savings–Millennials are also ill-prepared. Sixty-six percent of working Millennials were found to have nothing saved for retirement.
According to a recent article published by Pensions & Investment, public pension plans are cutting their assumed rates of return amid lower expected investment returns, longer life expectancies, and increased market volatility. Many pension plans have traditionally assumed a rate of return of around 7.5%, but in recent years, some plans have lowered this assumption to 7% or even lower. This change requires plans to set aside more money to fund future pension obligations and may require changes to investment strategies, such as increasing allocation to lower-risk assets like bonds. Despite the challenges, many experts believe this shift is necessary for public pension plans to remain financially sustainable over the long term. However, lowering the rate will also increase a plan’s unfunded liability – a tactic that pension opponents like to use to continue their “sky is falling” narrative.
Be sure to check back next Friday for the latest in the fight for a secure retirement! For now, sign up for NPPC News Clips to receive daily pension news from across the country directly to your inbox.