The Retirement Plan Solution

The idea of an active retirement as a right has today become a generally accepted idea in the United States and in developed countries around the world. But with more firms switching from defined benefit (DB) pension plans to defined contribution (DC) plans, this has quickly become a more complicated endeavor. The Retirement Plan Solution identifies where the DC system, as it currently operates, is inefficient, and shows how improvements in two area-the accumulation process and the spending phase after retirement-can make it an extremely productive force for generating post-retirement income. Starting with the assumption that it is impossible to make the average plan participant an investment expert, the authors suggest a change of emphasis away from investment education and toward better default options. They then detail the inefficiencies that currently exist in the accumulation phase of DC plans, and the opportunities for making this phase more effective. They also tackle the problems of the decumulation phase-outlining the three basic reasons that a retirement account can run out of money-and offer advice on spending policy, longevity protection policy, and investment policy. In addition to this, the authors look at the plan sponsor's role, including the simple but useful steps a plan sponsor can take to help in the post-retirement phase. Introducing a model of retirement savings that allows you to quantify just how much wealth is needed to provide adequate levels of retirement income, The Retirement Plan Solution provides a valuable reference that will enhance your understanding of this essential discipline.