Pension Matters
State Employees Retirement Fund
Most Recent Market Value | Michigan Treasury Bureau of Investments
April 2019
Retirement Savings Shortfalls
Employee Benefit Research Industry (EBRI) newest study, “Retirement Savings Shortfalls: Evidence from EBRI’s 2019 Retirement Security Projection Model® projects that the retirement deficit for U.S. households with a head ages 35–64 decreased 13.7 percent, from $4.44 trillion (in current dollars) in 2014 to $3.83 trillion in 2019. The largest improvement was experienced by younger workers, with those ages 35–39 projected to have a 22 percent decrease in their average deficits.
The study also finds the percentage of these households projected to have a “successful” retirement (defined as NOT running short of money in retirement) increased from 57.7 percent in 2014 to 59.4 percent in 2019.
Eligibility for participation in a defined contribution plan was found to have a significant impact. “The average retirement deficit for households with a head of household ages 35–39 with no future years of eligibility in a defined contribution plan is $78,046 per individual,” according to Jack VanDerhei, EBRI research director and author of the study. “This is more than five times the deficit for those fortunate enough to have at least 20 years of future eligibility in a defined contribution plan.” The results illustrate the importance of expanding coverage to those not currently eligible to participate in an employer-sponsored retirement plan.
Other takeaways from the study: low wage workers will see bigger deficits than high wage workers; women face a larger deficit than men; longevity risk is a critical factor; and reductions in Social Security benefits would have a material impact. Read more at www.ebri.org
FYI
AARP projects the U.S. population of people age 85 and older will more than triple between 5.8 million in 2010 to 19 million in 2050.
A Downward Shift In Nursing Home Fines
Collections from federal fines assessed on nursing homes that violate health and safety rules have dropped under the Trump administration — even though the government is issuing more penalties. Officials now are more often assessing one-time “per instance” fines, while the Obama administration relied more heavily on fines that were calculated based on the number of days the home was out of compliance. Source: Centers for Medicare & Medicaid Services Credit: Koko Nakajima and Jordan Rau/NPR
See the full story a www.npr.org.
More Moves Against Defined Benefit Pensions
With no fanfare in early March, the Federal Treasury Department issued a notice (see the notice at (www.irs.gov) that allows employers to buy out current retirees from their pensions with a one-time lump sum payment. The decision reverses Obama-era guidance, issued in 2015, that had effectively banned the practice after officials determined that lump-sum payments often shortchanged seniors. (duh)
Now, advocates for the elderly worry that millions of people receiving monthly pension checks could be at risk. (another duh)
"Permitting plans — for their own financial benefit — to replace joint and survivor or other annuities with lump-sum payments will reduce the retirement security of both workers and their spouses,” AARP Legislative Counsel David Certner said.
Since the 1980s, employers have shifted away from offering defined-benefit pensions, which provide a guaranteed monthly income for as long as someone lives in retirement. Instead, employers now favor 401(k) accounts, a finite pot of money that becomes available at age 59.5. Read more at www.cnn.com
More Scams
If you get a phone call from someone purporting to be from Medicare, hang up — and report the call.
That’s the advice in a new public-service announcement created by the Federal Trade Commission in collaboration with AARP.
Identity thieves are targeting Medicare recipients to obtain money or their Medicare, personal or banking information, the FTC warns. Scammers use various ploys to obtain the information, saying in some cases that a new card is being sent out and the call recipients need to provide the last four digits of their Social Security numbers, or they’ll be charged a fee.
Sometimes scammers promise free services or equipment, such as a back brace or neck brace, in exchange for Medicare information (as seen on TV), Or to wheedle sensitive data from you, they pretend there are new policies or updates.
Whatever the ruse, don’t comply since Medicare does not telephone recipients. Instead, contact the Centers for Medicare & Medicaid Services by calling 800-MEDICARE. (AARP)
Elder Abuse Task Force
LANSING — Michigan Attorney General Dana Nessel joined with Supreme Court Justices Richard Bernstein and Megan Cavanagh, Midland County Prosecutor J. Dee Brooks, state legislators Rep. Brian Elder and Sen. Paul Wojno, and 72-year-old Macomb resident Dennis Burgio to announce the formation of the Michigan Elder Abuse Task Force.
Nessel urged Michigan residents to report any signs or concerns about elder abuse to her office, which has established an elder abuse hotline for anonymous tips: 800-24-ABUSE (800-242-2873) or online at www.mi.gov/elderabuse. (media release from AG’s office)
Defined contribution plan participants are concerned about how to generate income in retirement, more so than in past, according to BlackRock (BLK)’s latest DC Pulse Survey.
Nearly two-thirds of workers (62%) said that the thought of having to translate retirement savings into regular income throughout their non-working years worries them, up considerably from 48% last year.
Meanwhile, confidence in retiring comfortably among those surveyed stalled. Only 60 percent said they are on track to retire with the lifestyle they want, down from 61%, 56% and 52%, respectively, in the three years prior.
FYI
The most an individual who filed a claim for Social Security retirement benefits in 2019 can receive per month is: $3,770 for someone who filed at age 70, $2,861 for someone who filed at full retirement age, or $2,209 for someone who filed at 62.
People who earned Social Security’s maximum taxable income — the amount of your earnings on which you pay Social Security taxes — for at least 35 years of their working lives are eligible to receive the maximum benefit. The maximum taxable income in 2019 is $132,900; the figure is adjusted annually based on changes in national wage levels, and thus the maximum benefit changes each year. (AARP)
Editor’s note: June Morse may be contacted at jmorse10@comcast.net or 517-886-9323.
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