At the June 10 webinar, Navigating Retirement Savings, a panel of experts discussed the long-standing retirement savings gap as well as new issues arising during the pandemic.
“Half of today’s working households won’t be able to maintain their standard of living in retirement,” said renowned retirement expert Alicia H. Munnell, framing a major theme of the webinar. “The main reason is the lack of continuous access to a work-based savings vehicle. . . . And for those lucky enough to have coverage, this new era of lower returns is going to be challenging.”
Alicia H. Munnell, Peter F. Drucker Professor of Management Sciences and director of the Center for Retirement Research at Boston College
Munnell is the director of the , as well as the Peter F. Drucker Professor of Management Sciences. The other two experts were Edmund F. Murphy III ’84, P’19, who is president and CEO of Empower Retirement and Great-West Life & Annuity; and Robert L. Reynolds, president and CEO of Putnam Investments and author of the book From Here to Security: How Workplace Savings Can Keep America’s Promise.
“I deeply wish we were able to hold this conversation in person. . . . But this is an opportunity to reach a wider audience,” said Jonathan Reuter, associate professor of finance, who moderated the discussion.
The panelists shared their perspective based on years working in and studying the field, as well as up-to-the-minute insights stemming from the current economic implosion. For example, Reuter asked, “To what extent did people freak out in their retirement plans in February and March and sell low . . . versus riding out the storm?”
Murphy responded, “Out of our client base, which is 9.6 million Americans, only two percent actually made some type of change in their asset allocation. . . . We thought we would have seen a flight to liquidity, and we just didn’t see that.”
Reuter wondered about employers suspending matching contributions. Having studied that same issue in the 2008 financial crisis, Munnell said that her center was prepared this time around: “We created a list of all the companies that suspended matches and we’re following it closely.” On the whole, she said, “it’s one of the most benign things you can do under financial pressure, versus widespread furloughs.”
One interesting development this year, noted both Reynolds and Murphy, has been the evolution of formerly digital-only “robo-advisors”—apps such as Betterment and Wealthsimple, which were meant to provide automated investment advice based on algorithms. Responding to customer needs, these apps have evolved toward a hybrid model that includes interaction with human advisors. “In periods of uncertainty, people want to talk to someone,” said Reynolds. “They want to confirm they’re going in the right direction or sitting in the right place.”
The panelists all said they see bipartisan support in Washington for expanding access to retirement savings plans. In the next 10 years, said Munnell, “I’m convinced, like Ed and Bob, that we’re gonna fix the coverage gap, and do it on a national basis.”