Retirement Spotlight

Brookings ReCap: Promoting Well-Being In Retirement

From increased life expectancy to affordable health care, to Social Security, panel explores today's retirement challenge

Washington, DC – This week, The Hamilton Project at Brookings convened policy experts, scholars, government officials and business leaders for a forum on “Promoting Financial Well-Being in Retirement” at the Brookings Institution.

 

U.S. Secretary of Labor Thomas E. Perez delivered remarks at the event. In advance of the forum, The Hamilton Project released the following new documents:

• A new policy proposal by John Friedman of Brown University entitled “Building on What Works: A Proposal to Modernize Retirement Savings”;

• A new policy proposal by Wesley Yin of UCLA entitled “Strengthening Risk Protection through Private Long-Term Care Insurance”; and

• A set of “Ten Economic Facts about Financial Well-Being in Retirement.

Introduction and Keynote Remarks

Opening remarks were delivered by former U.S. Treasury Secretary Robert E. Rubin; U.S. Secretary of Labor Tom Perez delivered keynote remarks.

Opening and Keynote Remarks Video:

Select Quotes:

Robert E. Rubin
“The financial landscape for retirement security has changed dramatically, with improvements in life expectancy, rising healthcare costs, rising long-term care costs, increased dependence on individual and family savings, changes in the way employees save, and greatly-heightened and increasing financial strains on federal, state and municipal social safety net programs. Our current situation is not sustainable or viable for the longer-term. We can—and we should—debate different policy responses, in all of these areas. But, what is not debatable is the need for reform.”

Thomas E. Perez
 “It's clear that even though we live in a defined contribution world, all too frequently, we're clinging to a defined benefit mentality. Our habits and our outlook haven't caught up to the reality — Americans there are still behaving as if that check will automatically come in the mail when they're 65.”  

• Thomas E. Perez
“To keep the promise of the American Dream and sustain a strong middle class… to ensure rising living standards and expanded opportunity… to ensure that people don't spend their golden years burdened by economic anxiety… we need to be creative about promoting and protecting retirement savings. We need to protect Social Security. We need to incentivize personal savings through smart and be creative about financial education. We need to use federal and state policy levers to eliminate barriers to job-based retirement savings.”

The forum also included two panel discussions focusing on the policy improvements needed to strengthen the economic security of American households and individuals during retirement years.

Panel 1: Addressing the Challenges of the Long-term Care Insurance Market
Participants in the first panel discussion included Wesley Yin of UCLA, Howard Gleckman, Resident Fellow at the Urban Institute, Thomas McInerney, President and CEO of Genworth Financial, and Alice M. Rivlin, Director of the Center for Health Policy at the Brookings Institution. Benjamin Harris, Chief Economist and Economic Adviser to the Vice President at the White House moderated the discussion.

We can—and we should—debate different policy responses, in all of these areas. But, what is not debatable is the need for reform.

Panel 1 Video

Select Quotes:

• Alice M. Rivlin 
“I’m not one of those who think the sky is falling just because the population is getting older. We’re in much better shape than many other countries.” Alice M. Rivlin “In 1988 Joshua Weiner and I wrote a book entitled “Caring for the Disabled and the Elderly: Who Will Pay?” At the time, we thought nursing home use would go up very rapidly as the population aged…. so far that hasn’t happened. Nursing home use has actually come down….what has exploded are all kinds of other arrangements [home health care, assisted living, villages]…”

• Wesley Yin
“There are about 850 life insurance companies in the US. At its peak about 15 years ago there were 130 that were offering long term care. Today it’s about 18.” Thomas McInerney “People don’t buy private insurance. So, particularly for middle-class Americans, Americans who don’t immediately qualify for Medicaid and do not have enough wealth to self-insure, they are ill-suited and ill-prepared for the financial risks they face.”

•  Howard Gleckman 
 “A 50-something woman who leaves her job to care for an aging parent, will lose $300,000 in lifetime income. So you should think about that cost versus the cost of insurance, and there might be a more cost-effective way to insure against this risk. But that’s not how people think…These are real trade-offs. This is real money that eventually comes out of people’s pockets.”

Panel 2: Improving Policy for Retirement Savings Accounts

Participants in the second panel included John Friedman of Brown University, James Poterba, Professor of Economics at MIT and President of the National Bureau of Economic Research, and Debra Whitman, Chief Public Policy Officer at AARP. Melissa S. Kearney, Director of The Hamilton Project moderated the discussion.

Panel 2 Video

Select Quotes:

• James Poterba
“Up toward close to the median of the distribution retirees are relying overwhelmingly on their social security income in retirement. So one cannot think about retirement security in the US without focusing absolutely centrally on the role that Social Security plays.”  

• Debra Whitman
“We need big and bold solutions to address these challenges, and we need more people to save. Most people reaching retirement don’t have enough to last them 30-40 years.”

• John Friedman 
 “Simplification [of retirement savings accounts] is also a major benefit; this is not only about reducing hassle, but it’s about improving decision making. Consolidating will help people make better decisions about their retirement savings.”

 

 

Photographs from the forum can be found here. Please do not hesitate to contact Kriston McIntosh with any questions concerning this week’s discussion.