Conference Presentation, Panel
Is Retirement Extinct?
Milken InstitutePaul Irving, Arthur Bilger, Teresa Ghilarducci, Kathleen Kennedy Townsend, Penny Pennington, Rick McGee, Linnea McCart, Katherine Collinson
- Edward Jones targets helping 7 million clients achieve a self-directed retirement, supported by a proposed "wisdom workers group" to facilitate intergenerational knowledge transfer between older and younger professionals.
- U.S. seniors face a G7-high poverty rate where one in five experiences chronic deprivation, exacerbated by a stagnation in longevity gains where projected years remaining at age 65 are shrinking for certain populations.
- Low-income women face severe retirement constraints, with only 15.9 years of retirement in the lowest societal tier, one-third of which is lost to illness, and service work after age 65 shown to increase morbidity.
- Structural economic shifts pose significant risks, including the potential disappearance of the truck driver occupation—the top job in 32 states—over a 5 to 20-year horizon due to automation, necessitating urgent re-skilling for 48-year-olds.
- Higher education instability is projected, with a forecast that 25% of four-year colleges will close within the next 10 years, while the rate of job and skill evolution has accelerated to a steepness previously unseen.
- Retirement security is threatened by a median U.S. savings rate of zero and the fact that 50% of businesses do not offer retirement plans, leaving employees without automatic savings mechanisms.
- A proposed Guaranteed Retirement Account (GRA) model calls for a 1.5% employer-matched contribution and refundable tax credits for earners under $40,000, garnering support from 77% of Republicans and Democrats and 86% of Millennials.
- Legislative efforts involving Senators Brown, Klobuchar, and Coons are advancing a GRA-based bill designed to prevent early withdrawals and mandate investment across short-term, medium-term, and long-term asset classes.
- Current congressional review includes proposals to extend accumulation timelines for IRAs and Roth IRAs for those working longer, alongside allowing 401(k) and IRA funds to access previously illiquid alternatives like private equity and private credit.
- Financial institutions are focusing on generating sustainable income streams for retirement periods lasting 15 to 40 years through enhanced annuitization and insurance solutions, while early saving trends show Millennials starting at age 22, 13 years earlier than Boomers.
- Polling data indicates that 80% of Americans fear retirement more than death, driven by a median savings rate of zero and the reality that half of businesses lack retirement offerings, prompting calls for automatic universal investment plans.