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Social Security &Other 

Public Pension Issues

-Archives 2007-

Also see our sites on Private Pension Issues, Trade Unions and Pension Issues and World Pension Issues

Report: Promises with a Price: Public Sector Retirement Benefits (December 2007)
This groundbreaking report provides a 50-state analysis of the public sector costs. The states promise to spend $2.73 trillion on retirement benefits in the next 20 years. States have put aside $2 trillion but still need to come up with at least $731 billion in additional funding to meet their obligations. Which states are ready to face the bill and which are not? The full report and fact sheets for each state provide the data. 

Pension Fund Shortages Create Hard Choices (December 19, 2007)
A Pew Center report published on December 19, 2007  reveals  the contribution from US different states into  their retirement plans for public workers. All together, the 50 States have promised to pay $2.7 trillion to retired State workers. Some states like Alabama, Arkansas or North Carolina have regularly contributed to the fund which is balanced today. Others, like New Jersey and West Virginia,won’t have enough money to pay their pension obligations and public programs. GAA will post the entire study in a forthcoming newsletter.  

Report: The Impact of Late-Career Health and Employment Shocks on Social Security and Other Wealth (November 2007)
Do workers save enough for retirement?  What does the future hold for current retirees and will the government assist retired people further?  Do late career health and employment shocks influence future Social Security benefits? The Urban Institute’s  retirement project provides interesting data on how current US retirement policies, reform proposals and demographic trends influence older citizens’ security. 

Obama Proposes Tax-and-Benefit Program Aimed at Women, Working-Class Families (November 7, 2007)
The Democratic presidential candidate, Senator Barack Obama, presented his plan for pensions on Wednesday in Iowa. He argues for a new 50% match on the first $1000 a year of retirement savings for families earning up to $75,000. He also wants to require all companies, except new ones or those with fewer than 10 workers, to be required to enroll employees in a retirement plan. 

Pleas for Pension Program (October 20, 2007)
About 150 workers, retirees and city officials gathered in the San Diego Convention Center hall yesterday to discuss their pension program. Miscalculations in this program have added nearly $150 million to the fund's deficit. Most options for solving the deficit are really unfair for workers. They include asking employees to make up the difference or give up the extra years, seeking court intervention or simply absorbing the debt as part of the city's overall unfunded liability.

Retirees Facing Cuts in Pension (October 19, 2007)
In another cutback implemented by the US Government, pensions of local Bethlehem Steel retirees will again be cut, and 1,100 people will have to pay money back. The federal Pension Benefit Guaranty Corp. (PBGC) spent the last four years analyzing data to figure out who owed the federal government money and who was owed money due to underpayments in their pensions. This waiting game only added to the confusion, frustration, and disappointment felt by this group. Retirees should appeal any decisions made by the PBGC concerning their pensions.

Low-Paid Means at Risk in Retirement (October 14, 2007) 

It’s a fact that the gap between high and low income workers is widening, especially when workers become older. In part, that's because the rich are getting richer. Another reason is that low-paid workers cannot afford to save in a 401 (k) system, thereby shutting them out of income in their old age. Now, the offshore and other private equity fund managers are buying pension funds and gambling with them in a highly volatile financial market. The federal insurance plan (PGBC) to “protect” pensioners when a company goes bankrupt has too little funding to rescue a widespread demise of major companies. Any reasonable person can conclude that this situation is a disaster waiting to happen.

Report: A New Approach to Raising Social Security's Earliest Eligibility Age (October 2007)
While Social Security’s Normal Retirement Age (NRA) is going up to 67 years, the Earliest Eligibility Age (EEA) remains at 62. Plans to raise the EEA bring up worries that they would unduly burden older workers in poor health. One plan under consideration would tie the increase to the length of time worked, the idea being that workers with longer work lives, who began working at the end of high school, are in worse shape than workers who began work after college, who have higher income and better health, and thus deserve earlier retirement. However, this report finds that another system, tying an increase to a worker’s Average Indexed Monthly Earnings (AIME), would better protect workers with low income and poor health. 

Report: Retirement Security: Women Face Challenges in Ensuring Financial Security in Retirement (October 2007)
This report addresses the gender inequality in the US that exists in retirement security and offers possible solutions to correct the problem. On average, women have less retirement income than men, largely because of women’s lower labor force attachment and lower earnings. The US Government’s Accountability Office has come up with “simulations of some Social Security changes that would compensate for low earnings or time out of the workforce.” This research shows that such changes could “tend to increase benefits for beneficiaries overall, and particularly those in lower income quintiles.” 

Treasury Rekindles Social Security Debate (September 25, 2007)
As the Bush Administration winds down in Washington over the next year, it has returned to stoke fears about US Social Security, offering “issue briefs” to Congress over the next three months. One such brief will focus on indexing benefits by income that drew bitter opposition in the last Social Security debates. GAA will keep you updated on these developments in the months ahead.

Ties to Hevesi Turn to Gold for Political Strategist (September 13, 2007)
A criminal investigation involving former New York State Pension Fund comptroller Alan G. Hevesi and his and political strategist Hank Morris, alleges both parties acquired millions of dollars acting as consultants to private hedge funds and equity firms investing into the State Pension Fund. Mr. Hevesi, who had sole authority over the Fund denies any wrongdoing, citing “the pension fund’s strong returns during his four-year tenure as evidence of sound management.

Report: African Americans Age 65 and Older: Their Sources of Retirement Income in 2005 (September 2007)
Despite some economic improvements in Social Security over the last few decades, minorities and women remain disproportionately poor. “Almost 80 percent of African Americans age 65 and older who receive Social Security depend on it for 50 percent or more of their income, and 44.3 percent of African Americans age 65 and older receive all of their income from Social Security payments.” This short fact sheet reminds us how important Social Security is to retirement income, and also points out inequalities in retirement income due to race and sex discrimination.

Retirement Loses its Meaning for Many (August 15, 2007)
In the United States over 1 million people of 75 years old and older are still employed. Pete Perillo, at 92, works as a judicial marshal in Stamford Superior civil court division. For him the retirement age has lots it meaning, just like for many others who continue working due to necessity or personal aspirations. "For the first time in history, four generations are working together," said Melanie Holmes, of Manpower Inc., an employment services company. She encourages companies to develop new strategies of retaining and recruiting older workers.

Mired in Debt, More People 55 and Older Face Bankruptcy (August 5, 2007)
Americans of 55 and older are increasingly facing bankruptcies, more than any other age group. The study published in the American Bankruptcy Institute Journal finds that consumer bankruptcies are 14,500 per week, 700 of which are people 65 and over, and 2000 of which are those 55 and older. Elders are using credit to pay for necessities like groceries, drugs and urgent house repairs; most draining are medical expenses. Social Security and pension income are simply no longer sufficient to meet day-to-day needs.

Report: How much do Americans Depend on Social Security? (August 2007)
(PDF format, 23 p)
In the next 75 years Social Security benefits risk surpassing payroll tax revenues by $4.6 trillion. According to a report by the National Center for Policy Analysis (NCPA), even high-wage workers depend on Social Security for retirement income. One possible approach could be the reduction of benefits for high-income workers. If notified in advance, only they have the ability to adjust their savings in order to assure an adequate consumption over the lifetime. Conversely, the findings show that the abolishment of Social Security would result in a significant consumption reduction for low and middle income workers. Social Security has great support now because it benefits all workers as a shared benefit, i.e., social solidarity.

Social Security Backlog Means Waits for Disability (August 10, 2007)
The backlog of applicants for Social Security disability benefits has doubled in the past six years and could reach 1 million by 2010. The approval process is weighed down by appeals hearings, as 65 percent of applications are initially denied and must be reviewed by federal judges. On average, applicants must wait 17 months for their case to be heard. “This is a completely unacceptable way to treat workers who have given so much to their jobs they are physically unable to continue,” said Edward F. Coyle, Executive Director of AARP.

Report: An Oldie But Goodie: The Importance of Social Security as Source of Retirement Income (August 2007)
(PDF format, 20 p)
Social Security remains a very important part of retirement in America, according to this report from the Center for American Progress. In 2004, Social Security accounted for 38.6% of retirement income, a much higher proportion than any other source. Low- and moderate-income workers depend the most on Social Security benefits, as the typical income for persons over 65 has actually declined since 2000. Therefore, the authors of this report insist that “Social Security benefits must be protected and strengthened.”

Report: Is There Really a Retirement Savings Crisis? An NRRI Analysis (August 2007)
(PDF format, 9 p)
Although academics and journalists have recently questioned the reality of a “retirement savings crisis,” the National Retirement Risk Index (NRRI) confirms that the retirement saving rate should be of serious concern. The percentage of households aged 51-61 which are at risk of being unable to sustain their standard of living during retirement has risen from 20% in 1992 to 32% in 2004. According to this report, the decrease in single-earner couples and the increase in Social Security’s normal retirement age have contributed to lower replacement rates for retirees.

Report: Experts Track Continuing Evolution of U.S. Pension System (July 2007)
(PDF format, 12 p)
The U.S. retirement system has already undergone major changes. The Employee Benefit Research Institute (EBRI) May 2007 policy forum tried to foresee the next changes expected to take place in the U.S. pension system. It is likely that new accounting rules requiring the employer to reveal pension and retiree health care costs will significantly affect pension coverage. Employers are worried because the convergence with international accounting standards could have a negative impact on the financial reports of many plan sponsors. Another key point of forum discussion was the restriction of the defined benefits by several large employers, questioning their commitment to a pension benefit.

Retirement at Risk: Who's Falling Short (July 31, 2007)
The recent study by the Center for Retirement Research (CRR) suggests that there is a deficit in retirement savings in most age and income groups. The findings discover that 36% of high-income households will not be able to maintain the same lifestyle in retirement as they do today. 40% of middle-income households will need to economize more and 53% of low-income households may fall short. "We're at the tail end of the golden era of retirement," said CRR Director Alicia H. Munnell. The shift from traditional pension plans to 401(K), longer life expectancy resulting in higher Medicare costs and taxes, necessitate a new retirement savings tier in addition to Social Security and work-based plans.

A New Threat to Social Security (July 20, 2007)
In this opinion piece, US Representative John Dingell derides President Bush for appointing Dr. Andrew Biggs as deputy commissioner of Social Security, as Biggs is notoriously determined to privatize the program. “We must again remind the president,” urges Dingell, “that privatization is not an acceptable alteration to the Social Security program.” Is it in seniors’ best interests for Social Security to have a deputy commissioner who wants to dismantle the program’s most effective features?

Sacramento Pension Plans in Trouble (July 18, 2007)
A recent statewide survey suggests that the California pension crisis has worsened during recent years. From 1995 to 2005, the average county had only 91% of the money necessary to disburse pension benefits to retirees. While CalPERS is approaching 100% funding, others, such as the counties, are facing shortfalls at present

Report: GAO: Federal Policies Offer Mixed Signals about When to Retire (July 2007)
(PDF format, 79 p)
According to the US Government Accountability Office researchers, federal policies offer incentives to retire both earlier and later than Social Security’s full retirement age depending on a worker’s circumstances. The availability of reduced Social Security benefits at age 62 encourages older Americans to retire before the program’s age requirement for full retirement benefits; however, the gradual increase in this age from 65 to 67 provides an incentive to work longer. Policy makers need to consider the consolidated impact of these programs on incentives to retire when considering the Social Security and Medicare changes. 

The Americans Need to Save More for Retirement (July 5, 2007)
 The traditional goal of saving ten percent of one’s income while working is no longer a guarantee of a prosperous retirement. In addition, the latest government data shows that the savings rate is at negative 1.4 percent of personal income, suggesting that people spend more than they earn. Rising inflation, health care costs as well as increasing life expectancy collectively call for more savings. Dallas L. Salisbury, chief executive officer of the nonprofit Employee Benefit Research Institute, said that most people do not make saving for retirement a priority when they are young. He also recommends that workers in their 40s use retirement calculators and save at least 20% of their income.

Report: Why Are Widows So Poor? (July 2007)
(PDF format, 6 p)
Unmarried women comprise an increasing proportion of poor older persons, largely because both public and private pension systems in the US are based on earnings and women tend to earn less than men during their lifetimes. Furthermore, after her husband’s death, a widow loses most of his Social Security benefit as well as most or all of any private pension benefit he may have had. Should women be punished financially for living longer than their husbands?

Report: Women and Social Security (June 2007)
(PDF format, 8 p)
Women tend to earn less than men from Social Security because they receive generally lower wages than men and are also more likely to be out of the workforce or take breaks in employment. Future reforms to the system, therefore, may be of particular concern to women. A uniform reduction of benefits, for example, would disproportionately impact women because they tend to rely more on Social Security during retirement than men do. Shouldn’t changes in Social Security eliminate gaps in equality rather than widen them?

Social Security Cooling (June 26, 2007)
Bernard Wasow, a Senior Fellow at the Century Foundation, demands that we ask presidential candidates for specifics about strengthening Social Security. As Baby Boomers retire, retirees will become a larger proportion of the population than in the past, and will therefore require more funding. The cost of administering Social Security is very low despite being universal, so privatization does not “cut fat” but rather shifts risks to the family. The challenges facing Social Security will not go away on their own and require “clichéd tough political choices” to fix them.

Social Security Fixer-Uppers (June 24, 2007)
There are a sufficient number of possible solutions to the looming Social Security financing problem, according to this article, but change is hindered by a lack of political will. Academics and think tanks propose changes such as increasing the age at which retirees can collect benefits or increasing the wages on which Social Security taxes are collected. Any proposed alteration to the current system would naturally have winners and losers, but the entire program should not be put at risk because politicians are unwilling to take on sensitive issues. 

Bills Affecting Workers Under Pension Plan Draw Extra Scrutiny (June 20, 2007)
Georgia legislators are carefully examining any proposed expansions of the state pension plan, as they fear that the upcoming “baby boomer bubble” will greatly strain the system. However, because Georgia’s program is fully funded, officials believe that the strain will be temporary. Certain special interests, such as the state’s Chamber of Commerce, would like to see the pension funding invested in venture capital funds to aid with economic development. But employee group oppose such risks with monies designed to pay workers’ retirements.

Supervisors Approve Pension Compromise (June 19, 2007)
San Diego County has approved a plan to continue health benefits to all retirees while also saving money for the government. The plan restructures the method by which the benefits are distributed, shifting responsibility for payment from the county supervisors to the county retirement association. Some supervisors wanted to cut benefits to all but the sickest and poorest seniors, a proposal that did not garner sufficient support to pass.

New Study Highlights Need for Social Security (June 12, 2007)

Despite the effective features of the Social Security system, such as protection of spouses, children and portability across state lines, an entitlement decrease could severely hinder retirees’ ability to live comfortably. The National Academy of Social Insurance demonstrated that, although an increasing number of workers are pursuing 401(k)-type plans, seniors still rely heavily on their Social Security benefits. Furthermore, the proportion of seniors’ pre-retirement income that is replaced by Social Security is decreasing, a trend accelerated by Medicare premiums which are rising faster than Social Security benefits.

More Older Workers Ask: Why Retire? (June 11, 2007)
John Feyk, a seventy-nine-year-old chemical engineer, is one example of a new trend of workers who continue to work past the traditional retirement age of sixty-five. As Social Security becomes less sufficient to cover the costs associated with an extended retirement, more seniors are choosing to work into their late sixties and beyond. Conflict may be inevitable, however. A recent survey indicates that one in four baby boomers plans never to retire, while a Boston College study found that employers remain “lukewarm” toward accommodating older workers.

More Seniors Struggle with Debt (June 4, 2007)
Social Security checks often cannot cover rising health care and housing costs. As a result an increasing number of seniors are falling into debt. According to a study, the median amount of debt for an elderly family rose 121 percent in the past 15 years. While Social Security comprises 91 percent of the income for the poorest of US seniors, its income replacement rates are among the lowest in the developed world.

Report: EBRI: Minority Workers Remain Confident About Retirement, Despite Lagging Preparations and False Expectations (June 2007)
(PDF format, 20 p)
According to a recent survey, African-American and Hispanic workers are at least as likely as other US workers to feel confident about their retirement security even though their savings and preparations lag behind. While some differences in preparing for retirement can be attributed to income distribution, other findings show that minorities are less prepared even when comparisons are made among workers with similar levels of household income. Less than half of African-American and Hispanic workers said they saved money for retirement, and most minorities with savings have only modest amounts. 

Report: Sources of Income of People Age 50 to 64 with Work Disabilities
(May, 2007)
(PDF format, 8 p)
Disabled people make up one of the impoverished layers of US society. The AARP Public Policy Institute Data Digest analyzed income sources, levels of benefits and poverty status of people with disabilities from age 50 to 64, filtering the results by gender and ethnicity. The study revealed that disabled people are likelier than non-disabled Americans to have a household income of only $ 15, 000 or less (26% versus 9%). Furthermore, only 35 % of them are employed, compared to 78 % of people without disabilities. Also, the proportion of work-disabled population is not evenly distributed across ethnic groups, with African Americans among the highest percentage disabled and unable to work. In conclusion, the report identifies the disabled individuals’ most important sources of income: Social Security programs, personal assets, supplemental security and pension income.

Report: MetLife: What Today’s Woman Needs to Know (May 2007)
(PDF format, 32 p)
Today’s working women in the US are twice as likely as their mothers’ generation to carry debt of $25,000 or more. They also have more opportunities than their mothers to be better packed for the retirement journey. Highlighting the importance of Social Security and Medicare benefits, augmented with 401(k) and IRA savings, this MetLife booklet offers practical advice and provides a checklist for women aged 20 to 70 as to how to best prepare for old age given America’s retirement system.

Report: SSI Recipients by State and County, 2006 (May 2007)
More than 640,000 New York State residents received Supplemental Security Income (SSI) in 2006, with the total amount of benefits exceeding $325 million. This report by Social Security Administration offers state-by-state data on Supplemental Security Income (SSI)—a cash assistance program that provides monthly benefits to low income aged, blind, or disabled persons in the 50 states, the District of Columbia, and the Northern Mariana Islands. 

National Academy of Social Insurance Brief: Social Security and Retirement Income Adequacy (May 2007)
Social Security has many features of an ideal pension system but its replacement rates are modest. Social Security today replaces about 40 percent for an average earner at 65 whereas retirees need 70-80 percent of their prior earnings to keep up their standards of living in retirement. Because most retirees rely on Social Security for most of their income, the NASI report analyzes the adequacy of Social Security compared to other forms of retirement income in helping retirees make ends meet. Despite being the world's richest country, the US ranks near the bottom of OECD countries with its low replacement rate for its citizens.  For more information click here.

It’s Not Your Mother’s Retirement: A MetLife Study of Women & Generational Differences (May 2007)
While the economic status of women has improved over the past few decades with more women in the workforce than at any other time in history and with higher wages, women still tend to earn less than men, are more likely to work part-time or leave the workforce temporarily for caregiving responsibilities, and live longer than men. These patterns dramatically impact women’s retirement security. This report attempts to understand the attitudes and behavior of women concerning retirement, concentrating specifically on similarities and differences between mothers and their daughters. 

Big Cities Are Havens for Aging Population (April 26, 2007)
Where do most urban senior citizens live?  Surprisingly, many people choose to live in bigger cities, such as New York, as they age. Victor G. Rodwin, professor of health policy and management at New York University’s Graduate School of Public Service, and his colleague, M. K. Gusmano, studied the four world’s largest cities as examples of naturally occurring retirement communities. Rodwin says, “Already today there are places where almost 20 percent of the population is 65 years old or more.” Their findings suggest that the health status of seniors living in the cities is the same as or better. Age in these cities is not correlated with poverty and labor force participation is quite high for people over 65.

Senators Push for Answers on Pensions in New Jersey (April 12, 2007)
New Jersey State Senators now realize they passed legislation that have hurt more than helped the pension system. They claim they were not fully informed of the risks involved in the measures they passed. Regardless of their intentions, the legislation has permitted the diversion of hundreds of millions of dollars from the pension fund. In response to this, Governor Corzine said the State will change some accounting procedures. He has asked the attorney general to investigate this serious situation that will undoubtedly affect many retirees in the years ahead.

N.J. Pension Fund Endangered by Diverted Billions (April 4, 2007)
State officials say the New Jersey pension fund for teachers is in “dire shape, with a serious deficit.” An inquiry showed that “New Jersey has been diverting billions of dollars from its pension fund for state and local workers into other government purposes over the last 15 years” and that no money was put into the pension fund in 2005. This was possible because the State claimed it had “excess” assets, and that those excesses would be used to finance poor school districts or health care. The Internal Revenue Service has very specific rules against “mixing pension money with money for other uses.” Even so, the Legislature and governors from both political parties authorized the diversion of funds. The IRS fears that in coming years, when the pension funds will be under pressure, other cases of mismanagement will appear.

Report: Automatic IRAs: Are They Administratively Feasible, What are the Costs to Employers and the Federal Government, and Will They Increase Retirement Savings? (March, 2007)
The rate of US personal savings has steadily declined during the last 20 years as Americans spend more than they save, at the rate of -0.4 % of personal income in 2004. There is evidence to suggest that an Automatic Individual Retirement Arrangement (IRA) enrollment will significantly improve savings of a great percentage of US workers. The Automatic IRA offers a new way to save for retirement for those who do have an employer-based retirement plan. This study examines the feasibility for an Automatic IRA initiative while also addressing policy and technical implementation issues.

Report: The Effect of Pensions on Longevity: Evidence from Union Army Veterans (March 2007)
Researchers examined the changes in pension laws for US Union Army veterans as a natural experiment to estimate the causal effect of pensions on longevity. The pensions reduced mortality rates until later years. For example, life expectancy for veterans who received a pension increased between 0.5 years and 2.7 years, with a larger increase for veterans who had better pension plans. The effect of veteran pensions on longevity was large -- across wealth groups. Pensions reduced mortality for both acute and non-acute causes of death.

Pension Tension: Figuring Out When to Lump It (March 13, 2007)
Companies increasingly give their retiring employees a choice: they can receive their pension either as monthly checks or in a lump sum. Even though the lump sum may seem attractive and safer in case of an emergency situation, this article puts forth arguments both for and against this option. Older workers in poor health in some cases are not allowed to take a lump sum because companies base their offers on average life expectancy. Bad news in the pension world include stories of workers such as pilots for ailing airlines that have dumped pensions onto the Pension Benefit Guaranty Corporation. Upon retirement, workers are left with a fraction of the income they expected and were entitled to receive. 

Suit Seeks Ex-Partner Rights (February 21, 2007)
A Portland Commissioner, Sam Adams, and his former partner were together for 11 years. When the relationship ended, they agreed to divide everything in half, including Adams’s Public Employee Retirement System (PERS) retirement account. However, PERS refused to divide the account because the breakup was not a legal divorce. Adams and his former partner decided to file a civil rights lawsuit because it is illegal to deny state benefits and services based on sexual orientation.

The New Pension Law and Defined Benefit Plans: A Surprisingly Good Match (February 2007)
Beginning in 2005, the Bush administration worked on pension reform legislation and the President finally signed the Pension Protection Act (PPA) in August 2006. This new law, first criticized, appears now to save defined-benefit schemes from under-funding and deficits. In this report, the Pension Research Council suggests that the PPA might improve benefit security, especially by alleviating the volatility of required contributions. The new law plans the frequency and the amount of funding. The author also studied the economic and policy context in which the law was implemented, the “major provisions of the PPA affecting funding of defined-benefit plans,” and a comparison with the old law.

Report: Public Pension Reform: A Primer (February 2007)
This report looks at the problems of the current PAYG (pay as you go) pension policy, especially with the demographic changes in the population.  The report suggests a new system called Personal Retirement Accounts (PRA) which would be funded through tax incentives.  The PRA would compliment Social Security offering savings in addition to the defined benefits, while reducing the costs of Social Security.  The danger, however, with this proposal is that it shifts the risk entirely onto the individual and variability in pension payments would be borne by the individual instead of the government.

Nightmare on Alms Street (February 13, 2007) 
GAA readers already know the pro’s and con’s of privatizing Social Security. But Martha Burk, in this article, explains its probable impact on women. Women would be the first victims of such privatization. Without social protection, 59.2 percent would live in poverty in their old age. Because women earn less throughout their career, because they are more likely than men to leave the workforce to take care of children or elderly parents, they earn less. The author notices somewhat ironically that Bush’s proposal to divert some payroll taxes to private pension accounts doesn’t satisfy Republicans’ big family values.

Diversion of Pension Funds Riles Teachers (February 12, 2007)
California Governor Schwarzenegger has proposed to take away $75 million from a supplemental payment to very old retired teachers in their 80’s and 90’s. State workers in California have one of the best retirement benefits in the nation. However, many older retired teachers have seen inflation eat away their benefits. A Supplemental Benefit has brought their pension up to the 80% replacement level. As a result, this fund is never in deficit: this surplus, formally known as the Supplemental Benefit Maintenance Account, is an “attractive target for lawmakers who have been struggling to close a chronic deficit in the state budget for the past six years.” 

Do Annuities Help Older Adults Manage Their Spending? (January 2007)
Today’s retirees typically rely on lifetime payments from traditional defined-benefit (DB) pensions and Social Security; however, there has been growing shift to Individual Retirement Accounts (IRAs) and defined-contribution (DC) pensions. While older persons may be better able to pay for unexpected consumption needs in retirement, they run the risk of spending too quickly and depleting their assets before they die. Thus, this Urban Institute brief suggests that a balance between annuities and unannuitized savings may be the right answer for future retirees.

Report: Mortality and Lifetime Income: Evidence from U.S. Social Security Records (January 2007)
This report looks at the effect of lifetime income on mortality rates in the US .  The study, based on Social Security records, examines the effects of income on mortality rates across gender and racial lines.  According to the report, the average life expectancy differences between African-American and white men show up among the poorest—those in the lowest earning cohort. In other words,  poor African-American men are more likely to die at earlier ages than do poor white men. 

Pensions Betting on Hedge Funds (January 26, 2007)
The Illinois teachers’ pension fund plans to invest almost $1 billion in hedge funds. Since the Illinois teachers’ pensions are among the nation's worst funded, officials are seeking hedge funds’ profits. Indeed, 40 percent of the nation's public pensions joined “these complicated and lightly regulated investment partnerships.” But watchdogs such as Chicago's Civic Federation warn that “moving beyond publicly traded securities requires a greater level of financial expertise.” They also advise to move cautiously into hedge funds and to limit the invested assets during the first years; but this option necessitates safety fees, which will cut the amount of benefits.

Workers in Tax-Exempt Places Save Less for Retirement (January 4, 2007)
Fidelity Investments did a survey on how much money individuals save for retirement. The survey concluded that workers in the education, government and health fields have saved less money for retirement than those who work in the private sector. Even though salary may vary between the public and private sectors, the average that a public sector worker saves is $48,000 working for a tax-exempt employer. One of the reasons, apparently, for this difference is that public sector workers feel that their pensions will suffice, especially since they have a variety of options of which kind of retirement plan for which they would like to sign up. Corporations, on the other hand, usually have one 401(k) plan.

Boomers are Urged to Use Direct Deposit (January 3, 2007)
The Treasury Department and the Federal Reserve are expected to launch a “Countdown to Retirement” campaign aimed at urging more boomers to opt for direct deposit.  The goal is to get boomers used to direct deposit so that more Social Security checks can be deposited through this method. Currently, about 20% of all Social Security and Supplemental Security Income checks are issued in paper form. However, more than 70 million baby boomers are expected to retire soon. Therefore, the costs of processing millions of additional checks and the volume of fraud those checks will generate could dramatically increase. "The key to safety and security from a consumer standpoint is direct deposit," says Don Hammond, fiscal assistant secretary for the Treasury Department.

Report: Would Raising the Social Security Retirement Age Harm Low-Income Groups? Urban Institute: Policy Briefs/Retirement Project Brief Series
(January 2007)
This brief examines the future distributional impacts of raising the retirement age by about three years. Researchers found that raising the retirement age hits lower-income workers less severely than other groups because the disability program provides some protection. However, it would still increase poverty rates. This report brief explains how combining the retirement age change with an enhanced minimum benefit increases lifetime benefits for the lowest earners.

Report: Mimimum Benefits in Social Security Could Reduce Aged Poverty
(January 2007)
Many older US citizens remain mired in poverty since Social Security does not guarantee a minimum benefit. Many long-term, low-wage workers receive benefits that leave them below the poverty line. This analysis explores two potential minimum-benefit designs and shows that an effective minimum benefit could help protect highest-risk groups such as African Americans, Hispanics and unmarried women. 

Report: What Moves the National Retirement Risk Index? A Look Back and an Update (January 2007)
The Center for Retirement Research at Boston College recently released a report that looked at the three major issues that have pushed the National Retirement Risk Index (NRRI) upward since the early 1980s. These factors are: 1) a decline in Social Security replacement rates due to the decline in one earner couples and the increase in Social Security’s Normal Retirement Age; 2) lower pension replacement rates as a result of the shift from defined benefit to defined contribution plans; and 3) lower annuity payments due to the dramatic decline in real interest rates.  

Report: Minimum Benefits in Social Security: Design Details Matter (January 2007)
Although Social Security does not currently guarantee low-wage workers a minimum retirement benefit, several proposed reforms include benefit minimums. This analysis suggests that such policies could help reduce poverty among older adults. Researchers examine five alternative benefit options and discuss lessons learned that could help guide designers of Social Security proposals.

Report: Households ‘At Risk’: A Closer Look at the Bottom Third (January 2007)
Without changes in the US retirement system, poverty among people 65 and over is likely to increase, according to a recent report by the Center for Retirement Research at Boston College. The Center measures households at risk of being unable to maintain their standard of living once earners stop working. In terms of income distribution, the bottom third of households is less likely to own homes, have pensions, or have meaningful 401(k) assets, making them more reliant on Social Security than their wealthier peers. As a result, the increased minimum age for Social Security benefits, from age 65 for those born in 1937 or earlier to age 67 for those born after 1960, will impact them more, according to the report. 

Report: Security Reform and the Supplemental Security Income Program for the Aged (January 2007)
Analysts and legislators have put forth many proposals to change the Social Security program.  However, most of those proposals ignore the interactions between Social Security reform and the Supplemental Security Income program (SSI), which is a means-tested program for elderly individuals and couples with low incomes and limited assets. This paper explicitly considers interactions between potential Social Security reforms and the elderly component of the SSI program. Using a micro-simulation model, researchers simulated six reform options that consist of changes to the Social Security system and/or changes to the SSI program.