Tamara D. Williams
Sex differences in inclusion in employerprovided retirement plans

This study explores the variances,
specifically gender and minority
status, predictors, and theories
associated with the availability of
retirement benefits.
.
Three Structural
Theories

 Structural theories - attributing differences in
income to work structures that are external to and
uncontrollable by the worker
 Individual theories - relating income to factors the
individual can control
 Life course perspectives - allowing for the
consideration of social, cultural, and historical
contexts in which people live
Participants

sample consists of 23,423 full time
and year workers including a sub
sample of workers, who actually
utilize retirement benefits, which
consist approximately of 15,000 full
time, full year workers.
Conclusion

 There was a significant positive relationship between
being a woman and working for an employer who
has a retirement plan.
 However, minority woman and currently married
women were significantly less likely to work for an
employer with a retirement plan than males.
 Minority status had a significant negative impact on
the likelihood of working for an employer with a
retirement plan.
Conclusion (cont.)

 Educational level was a significant positive predictor
of the employer having a retirement plan for the full
sample and for both men and women.
 Government working status ended to be a highly
significant positive predictor of working for an
employer with a retirement plan.
Value and potential impact of financial
literacy training on adolescents


Participants
 3 separate small focus groups consisting of 9th grade
high school students from a Washington D.C. charter
school (3 groups of 10students).
Purpose
 The rationale is that financial training must begin at
the freshman level to be effective by time the
students enter college.
Methodology

Students had to take a pretest referencing
financial literacy
Half of the students were trained and then
asked to train their peers
Students were asked to journal their
experience and outcomes
Conclusion

 An improvement in both pre and post test
scores of 33%.
 More specifically, 80% of the participants made
significant improvement on the post test.
 . Students reported positive changes in their
behavior related directly to the training
provided.
Demographics and
Retirement Income

Two Main Factors
 The old age dependency ratio is increasing,
probably the most important change
 Increasing life expectancy and its affect on
medicare needs.
Conclusion

 In 1983, Social Security OASDI trust funds were
projected to be solvent until at least 2063.
 By 1992 the year decreased to 2036.
 By 1995 survey the projected date has moved to
2030.
 Over the next ten years the trust fund will be
built up and is expected to be positive until the
year 2019
 these changes may include an increase in
retirement age and an increase in pay roll tax.
Reality Retirement
Planning

Traditional retirement planning assumes
household expenditures will increase each
year through retirement.
 “Reality” retirement planning assumes that’s
a household’s real spending will decrease in
increments through retirement.
QUESTION?

Are people spending less
voluntarily as they age or out of
financial necessity or
generational differences.
Conclusion

 People are voluntarily spending less during
retirement.
 The traditional approach tends to indicate a
much later retirement or decreased spending
potential in early retirement years.
 The traditional approach also gives the average
American household an unrealistic view of their
future by overstating what they need for savings
to achieve their financial goals.
Conclusion (cont.)

Reality retirement planning more accurately
portrays the spending habits of the average
American household.
Incorporating these statistics into a client’s
financial plans can give a more accurate
retirement projection.
Reality retirement planning accommodates
spending differences by deviating from
normal retirement planning procedures.
Related Conclusions

 Revolving retirement is occurring – it’s when
households cross back and forth between working
and not working, transition from full-time to parttime, wait for their spouse to finish working, pursue
other endeavors/dreams, volunteer, hobbies for
profit, etc.
 The revolving retirement segment will grow and
eventually dominate the majority of Boomer
households over the next ten years and eventually
achieve a more traditional retirement.
Are We Saving Too
Much for Retirement?

 The 80 percent rule pertains to how much to save for
your preretirement pretax income – rule of thumb
 For those who wait to save for retirement and follow
the 80 percent rule of thumb would save far too
much of their gross income, and would see their
annual resources spike upward when they retire.
 People should be saving less today and consuming
less when retired.
Participants

 Consists of a set of prototypical workers
planning for retirement in a recent year.
 Three types of earners are modeled, low,
medium, and high earners born in 1944
specifically.
 Either single or married to spouses who never
work or save but generate favorable tax
treatment.
 They must also have had two children living
with them from 1968-1985, and retire at one of
two different ages, 62 or 66.
Conclusion

 Low earners need to save less in general because
Social Security replaces earnings at a more
generous rate.
 Those who retire later need to save less because
they get more from Social Security and their
savings grows over a longer time.
 Americans are not necessarily saving too little
for retirement and the traditional approach of
the 80 percent rule is misguided.
Conclusion (cont.)

 People should save enough so that spending does
not need to drop precipitously in retirement.
 Even if the typical American is saving exactly the
right amount for retirement, nearly half will save too
much and nearly half will save too little.
 80 percent target is too high if one waits to start
saving, and instead one should split the difference
and consume a bit more before retirement and a bit
less after retirement
Implications

 Future research and development of retirement
programs and financial institutions must do more for
minorities in the way of financial planning and
implementation assistance.
 Supplying financial literacy courses will have a
positive impact on retirement incomes of society as a
whole, with an emphasis on minorities and lowincome families.
 Reality retirement planning is a new approach to
retirement that warrant further exploration.