Advice From A Pro On How To Fix America’s Retirement Crisis

Advice From A Pro On How To Fix America’s Retirement Crisis

In an interview with Barron’s, TIAA president and CEO Thasunda Brown Duckett discussed the looming retirement crisis in America, pointing to a $4 trillion retirement income gap that suggests roughly 40% of Americans are at risk of running out of income during retirement. With 30% of Americans over the age of 55 in the current era of record-high inflation, only 23% of Americans have access to a pension plan.

But Duckett is encouraged that there is movement on both sides of the aisle in Congress to address the problem, including policies that would make it easier for businesses of all sizes to give workers access to a retirement plan, and creating auto-enrollment and auto-escalation plans so that workers can start saving early and compound their savings over time. One bill that’s been introduced into Congress, the Lifetime Income for Employees Act, would address some of these issues and give more incentive to employers to offer benefits to plan participants, Duckett told Barron’s. It’s also important for people to educate themselves about risk in their portfolios as they move into their retirement years; in addition to market risk, there are risks like longevity, cognitive decline, and portfolio losses early on in retirement to consider. Though many retirement-plan participants are currently avoiding their portfolios, Duckett encourages them to do so and create a plan of diversification that can help protect against inflation. Though it’s unclear when interest rates will peak, now might be a good time to lock in some of the best rates in over a decade with “higher-quality government, corporate, and municipal bonds.” Meanwhile, growth stocks should combat inflation in the long run, as companies with solid balance sheets are better positioned to withstand volatility.

While Duckett predicts a recession is on the horizon, the uncertainty lies in how long and how deep it will be, and while a slowdown might be necessary to tempering inflation, neither the Fed or Wall Street knows the exact policy balance to do that without sending the economy into a steeper decline. At TIAA, they use indicators such as the Manheim Used Car Auction price index and Zillow monthly rent indexes to gauge the consumer-price-inflation data that the Fed utilizes. Rather than looking at inflation alone, they examine what’s driving the inflation, she told Barron’s.

And while TIAA’s focus is on retirement, Duckett is also well aware of the intergenerational wealth transfer that will evolve over the next two decades. Gen Zers and millennials need to be educated so that when that money comes into their possession, “they can do good with it,” she says—including doing better for the Americans who won’t be entitled to that transfer of wealth. That includes making structural changes to eliminate the systemic racism that was often written into laws and policy, which has led to a racial wealth gap of $184,000 for median white families and $23,000 for Black families. As for TIAA, they approach diversity not just by measuring what percentage of their employees are non-white or female, but by looking at where those employees are placed and whether they are moving up the ranks or not.

Duckett, who formerly ran J.P. Morgan’s Chase Consumer Banking division, joined TIAA about a year and a half ago, and is considered one of the most influential women in finance.


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