The Economist, February 12, 2004
“Easing the Pain of Retirement”
Alicia Munnell and Annika Sundén, who are both retirement economists in Boston, highlight a number of flaws [in 401(k) plans]. . . The challenge is to make voluntary personal retirement work better. They suggest introducing retirement saving by default, requiring workers to opt out of pre-determined settings in pension plans. . .There are formidable obstacles to this reform programme. . . Despite these difficulties, the reforms offer an ingenious way of guiding choices in pension saving without compulsion. Individuals need to take more responsibility for their pensions but they need help. Taking control of your retirement saving should not have to mean that you have to turn into a financial expert.
On Point, February 10, 2004
The Los Angeles Times, February 1, 2004
“Book Reviews” By Peter G. Gosselin
Of course this raises the question of what people actually do. This is where Munnell and Sundén come in. They’ve organized their book around the sequence of decisions Americans must make about 401(k)s – whether to participate, how much to contribute and so forth – and their findings are disconcerting: ‘The evidence … suggests that, although, in theory, workers could do very well under 401(k) plans, in practice they do not.
Boston Globe, January 31, 2004
“Cracks in the Nest Egg: 401(K) Plans Falling Short for Most, Author Warns” By Charles Stein
In her new book about 401(k)s, called Coming Up Short, Boston College professor Alicia Munnell finds that for households headed by people in their late 40s and early 50s, the median 401(k) balance is $37,000, a small fraction of what financial planners say is needed … Louis Berney, the editor of a newsletter that follows the 401(k) industry, said Munnell has put her finger on the essential problem with the system: ‘We’ve put all the responsibility on employees, and most of them are overwhelmed.’
Wall Street Journal, January 22, 2004
“Why Retirement Plans Are Falling Apart” By David Wessel
[According to Alicia Munnell, co-author of Coming Up Short]…a 401(k) plan can be a better deal than an old-style pension … But that isn’t typical. ‘People make mistakes at every step along the way’… ‘It’s not that people are dumb,’ Ms. Munnell says. ‘People live complicated, busy, rich lives, and they don’t have time or interest to turn themselves into financial planners. Nor does that sound like a very good option. Do we want people to coach Little League less and learn more about finance?’ Ms. Munnell offers a common-sense solution: Let people do what they want, but don’t make it easy for them to do the wrong thing.
Christian Science Monitor, January 5, 2004
“Why Retirement Plans Are Falling Apart” By David R. Francis
Alicia Munnell calls for strengthening the 401(k) system by having workers opt out of plans, rather than opt in as they do today. In other words, plans would automatically enroll all workers, set the contribution level to maximize the employer match, allocate assets to an age-appropriate mix of stocks and bonds, restrict investments in company stock, roll over any cash distributions to another retirement account, and pay retirement benefits as an annuity.
The Washington Post, December 7, 2003
“A Lost Retirement Dream for Boomers?” By Albert B. Crenshaw
Boston College economists Alicia H. Munnell and Annika Sundén, in a forthcoming book on 401(k) plans, note that the assets reported in retirement accounts don’t jibe with reported contribution rates. ‘Every study . . . indicates that those who join 401(k) plans make significant contributions across age and income groups. Yet they do not appear to end up with substantial asset accumulation. How does this happen?’ they write.