Industry Leaders Address ‘Revolutionizing America’s Retirement Landscape’

As economists project that 40% of Americans will run out of money during retirement, speakers at the Milken Institute’s 2024 Global Conference addressed the numerous factors contributing to this retirement crisis—including “Peak 65,” a lack of access to retirement plans, economic inequality and more. 

Thasunda Brown Duckett, president and CEO of TIAA, said at Monday’s panel that currently 11,000 Americans over the age of 65 are retiring every day, with the backdrop of a $4 trillion retirement savings gap.  

She added that women, on average, retire with 30% less saved than men, 54% of African Americans do not have enough to retire and 41% of young people between the ages of 25 and 35 are not contributing to a retirement plan. 

Duckett said there are three primary issues that need to be addressed by policymakers and the private sector: the access gap, the savings gap and the guarantee gap. 

“Fifty-seven million Americans do not have access to an employer-sponsored plan,” Duckett said. “That means we need to work together with good policy to make sure that there is an easier way for employers, particularly small businesses, to provide retirement options for their employees.” 

Duckett emphasized the importance of employers taking advantage of auto-enrollment and auto-escalation within their plans to help workers start accessing their workplace plans earlier.  

In terms of the guarantee gap, Duckett explained that in 1975, a large majority of workers had access to a defined benefit plan. This number has since dropped significantly. 

“So how do we ensure that millions more Americans can have the closest thing to a defined benefit without the stress of the balance sheet that companies face?” Duckett said. “We believe that opportunity is through an in-plan guaranteed solution.” 

Value in Public-Private Partnerships 

Will Fuller, president and CEO of Transamerica, reiterated that 30% of workers do not have access to a retirement plan through their employers, and he said this number is growing because the gig economy is growing. Fuller said the percentage of workers without access to a plan increases to 50% for those who work for small businesses. 

To provide more access to retirement savings, Fuller emphasized the value of public-private partnerships, which can be seen with the state-facilitated auto-IRA programs that require private sector employers to provide employees access to a state program if they do not offer their own retirement plan. 

“I’m hopeful [the state programs] prompt more employers to realize offering a retirement plan is really kind of the base relationship you have with your employees,” Fuller said. “And I’m hopeful that the government will cut a lot of the red tape and cut the cost to help small businesses who don’t have big HR departments.” 

John Carter, president and chief operating officer at Nationwide Financial, emphasized that the retirement crisis needs to be addressed through innovation and partnership across firms. Collaboration also needs to happen internally, he argued. At Nationwide, Carter said, he has a leadership team consisting of representatives from the firm’s retirement business, life insurance business and annuity business who “all sit at the same table.” 

“If [the leadership team] can collaborate, they can come up with some very creative solutions,” Carter said. “Our retirement plan business and our annuity business collaborated to provide [an] in-plan suite of products that not only are available on the Nationwide platform, but we’re also partnering with recordkeepers like Transamerica, Empower [and] Fidelity.” 

Helping Young Savers 

Penny Pennington, managing partner at Edward Jones, highlighted the importance of financial literacy education and spoke about a program Edward Jones initiated four years ago with the goal of educating a million young people about the basics of financial literacy. The firm harnesses its digital tools and provides schools around the country with access to financial education and advisers who can help train teachers.  

“This gets the basic tenets of investing and financial literacy in the hands of young people much more quickly,” Pennington said. “We know that when their understanding of the basics increases, their confidence increases.” 

Carter noted that in addition to educating students, it is important to teach young workers that saving for the future is “not linear.” For example, instead of putting off saving for retirement to save for a down payment on a house, Carter suggested that one could delay the time horizon for making the down payment and start contributing to a 401(k) in the meantime.  

“I think we have to do a much better job of saying there’s parallel paths that you can take toward your journey of being independent in retirement,” Carter said. “I think the linear [methodology] will end up always putting retirement last and they will not have the [benefit of compounding] that is such a value for young savers.”