Along with my co-authors at SCEPA's Retirement Equity Lab (ReLab), I released a report today that is the first to quantify the real effect of the retirement crisis - poverty. The report, "Are U.S. Workers Ready for Retirement?" identifies the share of people whose projected income in retirement will be below poverty across states. This message of downward mobility is important both to individuals whose retirement institutions are failing them and policy makers who will inherit the impact of increasing poverty on both social welfare and municipal budgets.

The report finds:

  • 33% of current workers aged 55 to 64 are likely to be poor or near-poor (less than 200% FPL) in retirement based on their current levels of retirement savings and total assets.
  • 55% of retirees will be forced to rely solely on their Social Security income.
  • Some states are worse off than others. 41% of near-retirement workers in Florida may experience poverty or near-poverty in retirement, followed by North Carolina and Texas.


  • Almost half of Americans who were working in 2011 were not offered a retirement account at work.
  • 68% of the U.S. working age population (25-64) did not participate in an employer-sponsored retirement plan because their employer did not offer one, they elected not to participate or were not working.
  • The amounts saved through employer-sponsored defined contribution (DC) retirement plans are only slightly better off than those without a retirement plan.


Downward Mobility is a Long-Term Trend Decreasing sponsorship of retirement plans has fallen nationally since 2000. Retirement plan participation rates follow the same pattern. This suggests that the declining sponsorship and participation rates identified in this report are not a temporary artifact of the 2008-2009 recession, but a product of persistent structural trends. If these trends continue, it is likely that retirement plan sponsorship and participation rates will continue to sink and the retirement readiness of U.S. workers is likely to get worse in the absence of efforts to improve the situation. Retirement Reform to Prevent Poverty & Systemic Failure In 2014, SCEPA found that declining bargaining power of workers, along with a decrease in firm size, were the largest predictors of the drop in sponsorship rates. Policies addressing diminished bargaining power and work to increase workers’ access to employment-based retirement savings vehicles are necessary to reverse the erosion of future retirement income. This includes creation of Guaranteed Retirement Accounts (GRAs), or personal retirement accounts funded by contributions from workers and employers and converted to annuities upon retirement.

After testifying before the Nevada State Assembly on March 3, 2015, the Las Vegas Review-Journal ran my op-ed, "Nevada PERS a Model for Nation; Don't Change It." In the article, I expand on my argument against AB 190, legislation that proposes to convert the state's public pension system from a successful defined benefit (DB) plan to a historically unsuccessful hybrid that decreases DB benefits to add on a defined contribution (DC) plan.

"Imagine that your bank advised you to refinance your mortgage. Except that instead of enjoying lower monthly payments and reducing the debt on your home, your mortgage payments will increase and your overall debt will skyrocket.

That’s a bit like the conversation that lawmakers in Carson City are having over the future of the Nevada Public Employees Retirement System, the mechanism by which the Silver State’s teachers, firefighters, police officers and other employees earn a modest, but secure retirement benefit."

The February 2015 employment report issued by the U.S. Department of Labor today reports an increase in the unemployment rate for workers over the age of 55. An estimated 62,000 more older workers joined the ranks of the unemployed in the month of February, bringing the unemployment rate of older workers to 4.3% from 4.1% last month.

These changes stand in contrast to the employment situation for all workers (16 years and over). Both the unemployment rate (5.5%) and the number of unemployed persons (8.7 million) edged down in the month of February.

As a sign of more trouble for older workers, the month of February marked a decline for the share of older workers with a job; the employment-to-population ratio declined from 38.3% to 38.0%.

The prolonged sluggishness of the labor market also forced an estimated 125,000 older workers to leave the labor force in the month of February. Older workers are becoming increasingly aware that as they are asked to work further into old age, the workplace grows no friendlier to their needs.

At SCEPA, our research finds that older workers have seen their job quality erode by more physically and demanding jobs. From 1992 to 2008, the proportion of jobs that always require "good eyesight" increased by 26.0%, 31.0% and 78.6% for workers aged 50-55, 56-61 and 62-65, respectively. We find that workers ages 56-61 report a much higher rate of jobs that always require "stooping, kneeling or crouching." In fact, we estimate that the rate of 'all the time' "stooping, kneeling or crouching" has increased by a remarkable 21.9% (for workers ages 50- 55) and 35.9% (for workers ages 56-61).

These findings are troubling because, as the National Center for Chronic Disease Prevention and Health Promotion points out, maximum strength diminishes after the age of 30 and by the age 65 maximum oxygen intake is reduced by 30%. This means that a lot of older workers are often working at maximum capacity.

We also know that as the workforce ages, the incidence of disability also rises. The University of Wisconsin-Madison's Trace Center study finds that the incidence of disability among working-age Americans is: 9.5% for workers in the 18- to 24-year-old range, 20+% for workers in the 45- to 54-year-old range, and nearly 42% for workers in the 65+ age range. Unfortunately, McMullin and Shuey (2006) find that when an employer believes a worker's limitations are due to "natural aging," accommodation is less likely.

These findings are in line with a Society for Human Resource Management (SHRM) study, which shows a majority of companies have not made special provisions for older workers. Older workers, for example, are often denied access to training, as employers are more likely to favor early-career and mid-career employees. Older workers also report wanting to move away from the standard nine-to-five, five-day workweek. Yet, only about 10% of workers are enrolled in formal, employer-sponsored flextime programs.

Clearly, the workplace remains far from friendly to older workers. It is no surprise that a lot of them are having a hard time findings work and find themselves forced to leave the labor force altogether.

SCEPA's Retirement Equity Lab at The New School published my paper with co-author Adam Hayes titled, "401(k) Tax Policy Creates Inequality." Though well-intentioned, the current system of tax deferral for retirement contributions undermines public policy aimed at strengthening retirement security for all Americans. In fact, it has become a regressive policy that contributes to wealth inequality.

Ghilarducci Hayes PN 2015-1 graph 1

This policy notes illustrates how two employees who are identical savers and investors in every way except for income receive different rates of return due only to the effects of the tax code. Converting the current system of tax deductions for defined contribution retirement plans to a refundable tax credit would solve this problem and treat all retirement savers the same.

I am proud and honored to be named to a group organized by New York City Comptroller Scott Stringer to study how to provide retirement security to New York City residents who lack retirement plans at work. The Comptroller announced his intentions to create the panel at SCEPA's 2014 conference, "Confronting New York City's Retirement Crisis," co-sponsored by the New York City Central Labor Council, AFL-CIO.

SCEPA's report, "Retirement Readiness in New York City," identified that employer sponsorship of retirement plans is falling. Between 2001 and 2011, the percentage of workers in the New York region with any type of retirement plan – either a traditional pension plan or a more widespread 401(k) plan – decreased from 49% to a mere 41%.

Nevada testimony picOn March 3, 2015, I spoke before the Government Affairs Committee of the Nevada State Assembly on AB 190. This legislation seeks to cut the state's healthy public pension system by decreasing its defined benefit (DB) program and introducing a defined contribution (DC) plan for future workers. 

In my testimony, I focus on failed experiments with the same formula in other states, including Alaska, Michigan and West Virginia. In each case, the changes increased the state’s pension debt beyond what it would have been if their DBs plan had been kept intact. 

The Las Vegas Review-Journal covered the hearing in their article, "Bill to Change Nevada PERS Sparks Debate in Assembly Panel."

On NPR's On Point with Tom Ashbrooke on February 25th, I referred to a list of questions that each investor should ask his or her financial advisory, aka "your guy." These will help ensure your savings are invested to benefit you, rather than the advisor or their company. Here they are. Please, please use them. 

Six Critical Questions to Ask Your “Guy”: 

1. How are you paid? Fee-only advisers receive no compensation from the sale of investment products. All others do. You can’t count on an adviser who gets a significant portion of their pay in sales commissions. Period. Leave if they are not fee-only.

2. Do you have any conflicts of interest that influence the advice you provide? Financial advisers who are registered representatives get paid to sell insurance or annuity products promoted by their brokers. Ask how they choose the investments they recommend. Ask them directly how they are paid.

3. Will my assets be housed with an independent custodian -- that is, a bank that is not selling the investment products? “Yes” is the only acceptable answer here. Bernie Madoff’s firm did not use one. Enough said.

4. Are your clients similar to me? If your fee-only adviser’s typical client has a net worth of $1 million or more, and you aren’t rich, think twice.

5. What services do you provide? If the adviser’s primary service is investment advice, and you are looking for someone to construct a complete financial plan for you, this adviser is unlikely to be a good match.

6. Do you act in a fiduciary capacity towards your clients? Leave fast if they don’t say yes. You are asking the broker if he or she is obligated to put your interest first, before that of his or her firm. If there is any other answer but a clear yes, grab your wallet tight and leave.