The Catholic University of America



A Shaky Stool:
Law School Program Examines Retirement Readiness

Only about one in ten Americans has saved enough, either privately or through employer sponsored plans, to afford the kind of retirement they dream about. 

That startling fact, and the reasons that lie behind it, were the focus of “Retirement Readiness: Are Today’s Retirement Plans Prepared for Tomorrow’s Retirees?” a symposium sponsored by The Catholic University of America Columbus School of Law at the National Press Club on April 16, 2012.
Presented and moderated by Catholic University law school Professor Regina Jefferson (at podium, above), the program brought together five experts who approached the problem of Americans’ failure to plan adequately for their post-working years from a variety of perspectives.
The average saved amount in a 401K retirement plan, for workers fortunate enough to have access to one, is $250,000 at the time of retirement. It may sound like enough, but in reality four times that amount is recommended.

“People don’t have a very good sense of what they need for retirement,” remarked Phyllis Borzi (below left), a 1978 alumna of Catholic University’s law school and currently the assistant secretary of labor for the Employee Benefits Security Administration (EBSA). EBSA oversees approximately 707,000 private-sector retirement plans and approximately 2.5 million health plans.
Borzi said that the traditional model of the three-legged financial stool—personal savings, a work pension, and Social Security—is often no longer sufficient to carry people through long retirements without running out of money.
So why don’t more people establish a pattern of saving early on in their careers, when time and compounding interest is on their side? The reason is that most basic of human foibles, procrastination. Workers convince themselves that planning can be postponed indefinitely, said Shlomo Benartzi, professor and co-chair of the Behavioral Decision-Making Group at UCLA Anderson School of Management.
Benartzi is a leading authority on behavioral finance with a special interest in household finance and participant behavior in retirement savings plans.
“Behavioral finance can really make a huge difference, but we have to be careful about how we implement it,” he said. 
Benartzi and his fellow panelists agreed on a basic point: there is so much “how to” financial information floating around out there that many people are confused or simply overwhelmed by the idea of sorting through it all to arrive at sound decisions.
Adding to the uncertainty, said the experts, is a growing hesitation to place all of one’s financial eggs in a single basket—a company’s 401K plan—in the absence of assurances that the company will still be around in 20 or 30 years.
“One type of retirement plan does not fit every type of business,” said Kathryn Ricard, senior vice president of retirement policy at The ERISA Industry Committee. “The one-size-fits-all mentality is one that we should move away from.”
Other panelists included Mary Ellen Signorille (below left), CUA Law Class of 1977 and senior staff attorney, AARP Foundation Litigation; and Jack VanDerhei, research director for the Employee Benefit Research Institute, a nonprofit, nonpartisan organization committed to public policy research and education on economic security and employee benefits.
The panelists concurred that since a guaranteed and risk-free approach to retirement savings does not yet exist, the best option for most people remains an employer-sponsored plan, if available.
“The fundamental question is why are you not saving? It isn’t hard to do. If you have a plan, join it,” said Borzi.
The discussion on retirement readiness was the third in the Columbus School of Law’s 2011-2012 National Press Club lecture series, Critical Insights in the Law and Law Practice.
The final program of the academic year, “Religious Liberty Under President Obama,” is scheduled for May.