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    Hispanic Heritage Month: Building Financial Security through the Latina Savings Project

    Tuesday, September 25th, 2018

     

    Half a century ago, President Lyndon Johnson signed the nation’s first formal recognition of Latino/Latina culture, history, and contributions by declaring Hispanic Heritage Week in the United States. Twenty years later, President Ronald Reagan reaffirmed the importance of this celebration by expanding it to a full month, from September 15th through October 15th. Today, nearly 59 million people in the U.S. – over 18% of the total population – are of Hispanic origin.[1]

    As we honor the extraordinary cultural and historic contributions of Hispanic Americans and Latinos/Latinas, however, it’s important to acknowledge the many social and economic barriers that exist – particularly for Latinas. For example:

    Nearly one in three (30.9%) Latinas works in service occupations, which traditionally are lower paid;[2]

    *  A Latina worker earns just 53 cents for every dollar earned by a White man[3]

    *  Roughly two-thirds (65%) of Latinas work for employers that don’t sponsor retirement savings plans[4]

    *  Just one in five Latinas is covered by a private pension[5]

    *  Almost three-fifths (58%) of Latinas have no retirement income from savings and assets.[6]

    The result? Nearly one in five (19.8%) of Latinas aged 65 and over lives in poverty.[7]

    And, because Latinas age 65+ have longer life expectancies than the majority of the U.S. population, they are likely to experience worse poverty, for a longer period, than most other Americans. Retirement planning is important for all of us, and it is especially essential for Latinas.

    The Latina Savings Project

    That is why WISER is collaborating with MANA—A National Latina Organization on the Latina Savings Project. With funding from the AARP Foundation, the demonstration project is designed to support low- and moderate-income Latinas in developing a habit of saving for retirement through education and hands-on access to savings accounts. WISER and MANA are partnering with community-based Latina organizations in Baytown, Texas; Albuquerque, New Mexico; and Topeka, Kansas, with plans to expand to other communities.

    The project helps participants open savings accounts and begin to contribute what they can afford, with added opportunities for matched savings contributions. The project also provides culturally-specific workshops that focus on the importance of saving and offer practical advice about how to get started.

    The goal of the project is to help improve the long-term financial security for its participants. Ideally, a successful outcome will help jump-start other efforts to increase Latinas’ retirement savings. More information about the project will be available soon at www.wiserwomen.org.

     

    [1] https://www.census.gov/newsroom/facts-for-features/2018/hispanic-heritage-month.html

    [2] https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk

    [3] https://iwpr.org/publications/gender-wage-gap-2017/

    [4] WISER, “Latinas and Retirement: Just the Facts”

    [5] WISER, “Latinas and Retirement: Just the Facts”

    [6] WISER, “Latinas and Retirement: Just the Facts”

    [7] https://nwlc.org/wp-content/uploads/2017/09/Poverty-Snapshot-Factsheet-2017.pdf

     

    It’s Not Too Late! Special Medicare Part B Enrollment Deadline Approaching

    Friday, September 21st, 2018

    cash_register_medical-cost_color

    Did you become eligible for Medicare Part A on or after March 1, 2013?  Did you keep your Affordable Care Act (ACA) health coverage instead of enrolling in Medicare Part B and then discover there were penalties for keeping that coverage?

    You have until September 30, 2018 under a special program which lets Medicare Part A beneficiaries sign up for Medicare Part B without late enrollment penalties.

    Who is eligible?

    Medicare beneficiaries who were covered by a qualified health insurance plan and who are not enrolled in Medicare Part B are eligible. Perhaps you turned down Medicare Part B coverage or dropped it because you thought ACA qualified health coverage was more affordable.  If so, what you did not realize is that you would lose the benefits of ACA coverage because of your Medicare eligibility.  And, you will face Part B higher coverage costs for life.

    What does the special relief provide

    It provides a special enrollment period that allows individuals to enroll in Medicare Part B without facing lifelong enrollment penalties. This ends September 30, 2018

    If individuals have Part B coverage now but are paying late enrollment penalties, special relief would end the penalties.

    Apply for special equitable relief to enroll in Medicare Part B and/or to eliminate your Part B enrollment penalties.

    Call the Social Security Administration (SSA) at 800-772-1213 or go to www.ssa.gov to find a local Social Security office that you can visit in person

    Once at the office or on the phone with a representative, request special “equitable relief” to enroll in Part B and/or eliminate your Part B penalties.

    Do this BEFORE SEPTEMBER 30, 2018!

     

    Visit the Center for Medicare and Medicaid Services to learn more about enrolling in this special program.

    Understanding and Solving the Problem of Women’s 401(k) Cashout Leakage

    Wednesday, August 1st, 2018

    A cracked egg with money flying out the window.

    Guest author: Tom Hawkins, vice president of sales and marketing with Retirement Clearinghouse

    At a recent Women’s Institute for a Secure Retirement (WISER) roundtable addressing strategies, choices and decisions for women’s retirement income, important new data was presented that highlights the challenges faced by women in preserving their 401(k) savings when changing jobs – particularly for women with balances less than $5,000.

    Compiled by Retirement Clearinghouse (RCH) and presented to the WISER roundtable by RCH EVP Tom Johnson, the data indicates that women with small 401(k) balances cash out much more frequently than their male counterparts.  However, as women’s 401(k) balances grow, they become more likely than men to preserve their retirement savings.

    These behaviors, along with the results of the Auto Portability Simulation, suggest that a program of retirement savings portability could incubate women’s small 401(k) balances, allowing them to more effectively grow their savings to higher balance levels, where more virtuous behaviors prevail.

    An infographic summarizing the statistics is available for download at this link.

     

    Women’s Cashout Leakage By-the-Numbers

    Using a multi-disciplinary approach that incorporated industry research on cashout leakage, women’s representation in defined contribution plans, participant turnover rates, the Auto Portability Simulation, the EBRI/ICI 401(k) database and the EBRI Retirement Security Projection Model®, the results provide a model of women participants’ post-separation job-changing and cashout behaviors.

    • Based on Vanguard research, women collectively represent about 40% of all defined contribution plan participants.
    • Each year, an estimated 5.9 million women participants will change jobs.
    • Of these 5.9 million women job-changers, approximately 2.4 million, or 41% will cash out $28 billion in retirement savings, paying taxes and penalties.
    • 2.1 million, or 36% will have balances less than $5,000. Of these, 1.5 million – a whopping 71% — will cash out $2.6 billion in savings.
    • Over a generation, 104 million women will cash out almost $800 billion in retirement savings, in today’s dollars.

    Drawing upon a 2015 survey by Boston Research Technologies, the RCH data also revealed that, at sub-$5,000 levels, women of all ages tended to cash out at much higher-levels than their male counterparts, as indicated in the graph below.

     Womens Cashouts Small Balances Chart

    Chart 1 – Women’s Odds of Cashing Out Small Balances
    Source: Actionable Insights for America’s Mobile Work Force, Boston Research Technologies (2015)

     

    The Promise of Portability

    A more promising data point was revealed in a 2011 study by Aon Hewitt, indicating that women – at higher balance levels – were more likely than their male counterparts to preserve their retirement savings from job-to-job.  This finding seems to mirror other research (ex. – The $10,000 Hurdle, Northern Trust, 2017) suggesting that efforts to move participants’ balances to higher thresholds can act as an effective deterrent to cash outs.

    In preserving and incubating women’s small 401(k) balances, auto portability delivers.

    Incorporating the results of the Auto Portability Simulation, the RCH figures show that, on an annual basis, auto portability would preserve the savings of 1 million women participants.  Over a generation, 42 million women would preserve their retirement savings, worth about $365 billion in today’s dollars.

    While the systemic results of auto portability are impressive, its effect at an individual level is equally impactful.

    The RCH analysis depicts the individual impact of preserving 1-3 $5,000 balances over the course of a career.  As the figure shows below, preserving just one $5,000 balance at age 25 can result in $70,000 in retirement savings, whereas three $5,000 balances preserved over the course of a career could result in an additional $123,600 in retirement savings.

    Preserving Small Balances

    Figure 1 – Value of Preserving $5,000
    Source: Retirement Clearinghouse

    Taken together, the new data presented at the WISER roundtable demonstrate that by reducing cashouts, consolidating balances and achieving higher balance levels, women could benefit disproportionately from the widespread adoption of auto portability.

     

    Tom Hawkins is vice president of sales and marketing with Retirement Clearinghouse, and oversees all key operational aspects of this area, including RCH’s web presence, digital marketing and plan sponsor proposals. In other roles for RCH, Hawkins has performed product development, helped lead the company’s re-branding, evaluated and organized industry data and makes significant contributions to RCH thought leadership positions.

    WISER

    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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