Retirement Income Adequacy for Boomers and Gen Xers: Evidence from the 2012 EBRI Retirement Security Projection Model®
Measuring retirement security -- or retirement income adequacy -- is an extremely important topic. EBRI launched a major project to provide this type of measurement in the late 1990s for several states concerned whether their residents would have sufficient income when they reached retirement age. After conducting studies for Oregon, Kansas, and Massachusetts, a national model -- the EBRI Retirement Security Projection Model® (RSPM) -- was developed in 2003, and in 2010 it was updated to incorporate several significant changes, including the impacts of defined benefit plan freezes, automatic enrollment provisions for 401(k) plans, and the recent crises in the financial and housing markets. EBRI has recently updated RSPM for changes in financial and real estate market conditions as well as underlying demographic changes and changes in 401(k) participant behavior since January 1, 2010 (based on a database of 23 million 401(k) participants). This paper provides updates for the previously published EBRI Retirement Readiness Ratings™ as well as the Retirement Savings Shortfalls. EBRI’s updated 2012 Retirement Security Projection Model® finds that for Early Baby Boomers (individuals born between 1948-1954), Late Baby Boomers (born between 1955-1964) and Generation Xers (born between 1965-1974), roughly 44 percent of the simulated lifepaths were projected to lack adequate retirement income for basic retirement expenses plus uninsured health care costs. These “at-risk” levels are some 5-8 percentage points LOWER than what was found in 2003, largely due to the growing adoption of automatic enrollment by 401(k) plan sponsors. Eligibility for a workplace defined contribution retirement plan has a significant positive impact on “at-risk” levels. The aggregate retirement income deficit number, taking into account current Social Security retirement benefits and the assumption that net housing equity is utilized “as needed,” is currently estimated to be $4.3 trillion for all Baby Boomers and Gen Xers. The PDF for the above title, published in the May 2012 issue of EBRI Notes, also contains the fulltext of another May 2012 EBRI Notes article abstracted on SSRN: “Trends in Employment-Based Coverage Among Workers, and Access to Coverage Among Uninsured Workers, 1995-2011.”
The Impact of a Retirement Savings Account Cap
This Issue Brief provides an initial analysis of the potential financial impact on private-sector retirement benefits of the retirement savings account cap included in the Obama administration's FY 2014 budget proposal. It finds that although a very small percentage of current 401(k) participants with IRA accounts have combined balances sufficient to be immediately affected by the proposed limit, over time (and depending on the applicable discount rates, whether a defined benefit pension is involved, and the size of the 401(k) plan) the impact could be much greater. Simulation results for 401(k) participants assuming no defined benefit accruals and no job turnover show that more than 1 in 10 current 401(k) participants are likely to hit the proposed limit sometime prior to age 65, even at the current historically low discount rate of 4 percent. When the simulation is rerun with discount rate assumptions closer to historical averages, the percentage of 401(k) participants likely to be affected by these proposed limits increases substantially: For example, with an 8 percent discount rate, more than 20 percent of the 401(k) participants are simulated to reach the limit prior to retirement. When the impact of stylized, defined benefit account assumptions are added to the analysis, the percentage of 401(k) participants simulated to reach the proposed limits increases even more: In fact, for 401(k) participants assumed to be covered by a 2 percent, three-year, final-average plan with a subsidized early retirement at 62, nearly a third are assumed to be affected by the proposed limit at an 8 percent discount rate. Additional analysis is performed for small plans (those with less than 100 participants) to assess the potential impact of eventual plan terminations if an when the owners and/or key decision makers of the firms reach the cap threshold. Depending on plan size, this may involve as few as 18 percent of the firms (at a 4 percent discount rate) to as many as 75 percent of the firms (at an 8 percent discount rates).
The development of biological systematics : Antoine-Laurent de Jussieu, nature, and the natural system
A reevaluation of the history of biological systematics that discusses the formative years of the so-called natural system of classification in the eighteenth and nineteenth centuries. Shows how classifications came to be treated as conventions; systematic practice was not linked to clearly articulated theory; there was general confusion over the "shape" of nature; botany, elements of natural history, and systematics were conflated; and systematics took a position near the bottom of the hierarchy of sciences.