Should Women Receive Retirement Income Subsidies?

Income inequality is a huge social and political issue this year. But just two years ago it was gender equality grabbing the headlines. It was then that the dual and dueling messages of two Ivy League-educated, wealthy, women received a lot of attention. Sheryl Sandberg wrote the blockbuster book Lean In… and Anne-Marie Slaughter wrote “Why Women Still Can’t Have It All,” for The Atlantic. Both touched on the difficulties of achieving work-life balance, pay equity and the impact of entering and exiting the workforce. Neither specifically discussed the impact of gender income inequality on women’s retirement income. But it is a conversation worth having.

Earnings Have A Real Impact On Retirement Savings

Most people are familiar with the equal pay for equal work efforts—the latest being the Paycheck Fairness Act. They are aware of the often-cited statistic that women who work full-time earn on average 77 cents for each dollar men earn. They may also know some of the reasons why the gender pay gap exists, including but not limited to:

  • More men choose higher paid professions like engineering and finance
  • More men negotiate raises and promotions than women
  • More women leave the workforce to take care of family
The bottom line is despite the reasons for the gender income equality gap; the result is that women have lower retirement savings than men because saving for retirement is linked to earnings. Social security benefits are based on average lifetime earnings. Defined benefit pension plan benefits are based on earnings and years of service from a specific job. And the ability to save for retirement and receive employer-matching contributions is also impacted by earnings.

A Solution to Women’s Retirement Savings Problem Continue Reading...

Millennials Remain Skeptical of 401(k) Plans


I know quite a few millennials—some are nieces and nephews and others are children of friends and acquaintances. I love and admire them all. For the most part they are all smart "kids" who are decent and kind. But I must confess: I don't find them as interesting and awesome as their grandparents, parents and friends do. That’s probably because I can still remember being their age and thinking I was smarter and more interesting than my current self would find. Make sense?

Anyway, despite my aloofness towards millennials, I do enjoy having a "serious" conversation with them. Especially when the conversation is about some of my favorite subjects to talk about. In this case: workplace retirement savings plans; specifically 401(k) plans.

The Conversation

Recently I had dinner with two millennials. They are recent college graduates who are smart and focused. To their immense credit they are researching various retirement savings options. So, naturally, the conversation turned to workplace 401(k) plans. And my excitement barometer went way up when
one of these millennials called the 401(k) plan a scam.

Don’t get me wrong, I’m not offended by those words at all, I just never met a millennial that expressed their wariness of financial markets so abruptly. Personally, I think they have many reasons to be cautious.

  • They were in college during the worst recession of their and their parents’ lives
  • They know how difficult it is to find a job, let alone a good paying one
  • They also know about the government’s bailout of Wall Street
All the same, I hope they get over their worries and start saving now. Any type of saving will do, but I want them both to contribute to a 401(k) or similar plan. Here’s why. Continue Reading...

What I Learned About Open Enrollment From The U.S. Open Tennis Championships


It’s always interesting to read the survey results and headlines about just how much American workers hate the annual open enrollment season. Workers would rather go to the dentist or prepare their taxes than read confusing health insurance jargon and fill out forms. I doubt but for a few oddballs that either proclamation is true. However, the message about open enrollment is loud and clear—the typical open enrollment season is unwelcome by an overwhelming majority of workers. They want the end result—health insurance and other benefits coverage—without the process.

You see Americans find open enrollment as confusing as finding the section, row and seat number at Arthur Ashe stadium. The information seems so simple but for way too many people all those letters and numbers look like the Cyrillic alphabet. Even when the section and seat numbers are clearly marked on placards you see folks turning around in circles or trying to boot others out of their rightful seats. If they can’t find a clearly marked Section 303, Row M, Seat 18, how are they going to understand a Section 125 cafeteria plan or Section 401(k) retirement savings plan?

And it is not that they can’t understand the information or find the right seat, it’s more that they don’t have the patience to take a step back and think through what they need in a health plan or where they are in the stadium. They want to jump at the first thing they see that looks remotely like what they want, and they want to make choosing it easy peasy.
Continue Reading...