ABOUT OUR COLLABORATION
In 2020, we formed a research collaboration with the Employee Benefit Research Institute (EBRI). Drawing on their database of more than 23 million 401(k) and IRA accounts and JPMorgan Chase data for around 62 million households, we are able to create a holistic view of household finances. We believe real data about real behaviors can deliver the most useful insights to help further retirement outcomes.
Our latest research collaboration with EBRI uses their joint dataset with the National Association of Government Defined Contribution Administrators (NAGDCA). Titled “Leveraging defined contribution plans to help overcome public pension shortfalls,” this new paper examines the spending and saving behaviors of public sector workers and offers actionable steps that plan sponsors can take to help improve their employees’ retirement readiness. The following exhibit from the publication shows how lower tenure employees with less generous pension benefits spend nearly the same as higher tenure employees with more generous benefits. The paper also notes that lower tenure employees do not save much in their defined contribution (DC) plans to help offset the reduction in pension benefits. This high spending, combined with reduced pensions and low DC savings, poses a significant challenge for these lower tenure employees as they try to achieve a successful retirement.
Of those with pension benefits, lower tenure employees spend nearly the same as higher tenure employees, whose benefits tend to be more generous
MEDIAN SPENDING-TO-NET-INCOME RATIOS BY AGE AND TENURE
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