What Does the Future of Retirement Look Like?

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• On: 09/02/2024 18:49:06
• In: News
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By: Hank Kim, NCPERS

There's nothing quite like back pain and a milestone birthday to make us acutely aware that we are, in fact, aging and getting closer and closer to retirement each day. Having worked on issues surrounding retirement security for more than 20 years, the topic of retirement is often on my mind. But as I approach my 55^th birthday, I can finally see my own retirement looming on the (distant) horizon.

It's got me thinking: What does the future of retirement look like?

For many, it's not a linear path—nor does it always go as planned. Although many plan to work until the age of 65, seven in 10 retirees now report leaving the workforce at a significantly lower age than anticipated. Of those, 70% left the workforce for reasons beyond their control, according to EBRI's 2024 Retirement Confidence Survey.

At last month's Public Pension Funding Forum, one speaker raised the idea of retirement evolving into more of a ‘state of mind' rather than permanent status. Some may meet the definition of retired while continuing to work on a part-time or seasonal basis, for example.

Regardless of exact retirement age or definition, the outlook is bleak for far too many. New data from Morningstar finds that approximately 45% of Americans will run of out of funds if they retire at 65. Compared to the private sector, however, public sector workers are much better financially prepared for their retirement years—largely due to their access to defined benefit plans.

As it becomes increasingly clear that the shift towards defined contribution plans is leaving millions of Americans in the lurch, it only adds to the urgency of the work that NCPERS and its members do each day to protect and expand access to pensions. We're proud to say that our members currently oversee a collective $5 trillion in retirement funds on behalf of approximately 22 million active and retired public servants.

Outside of our core mission to promote and protect pensions through advocacy, education, and research, NCPERS continues to do extensive work on issues impacting retirement security more broadly. Since 2010, we've been closely involved in the fight to make state-sponsored Secure Choice retirement savings programs a reality. We also helped establish (and continue to support) Georgetown's Center on Retirement Initiatives, which helps track the success of these programs.  Per their tracker, as of 2020 there were 57.3 million private sector employees without access to an employer-sponsored plan. Today, there are 17 state-facilitated retirement programs with more than $1.64 billion in assets, bringing much-needed access for millions.

While it's hard to predict what the future of retirement will look like, it's clear that both policymakers and industry advocates will play a key role. And in a high-stakes election year, it's especially important to stay engaged and informed about the policy developments that may impact the retirement security of your plan participants.

In addition to keeping our members informed of policy-related developments through our communications, we encourage you to join us at NCPERS Legislative Conference & Policy Day. Held January 27-29 in Washington, DC (immediately after the Pension Communications Summit), this unique event combines learning and advocacy. First, attendees hear directly from lawmakers about the latest policy-related developments impacting pensions. Then, attendees have the opportunity to have their voices heard on Capitol Hill during coordinated meetings with congressional representatives.

The stakes are high. I hope you'll join us this January as we once again meet with policymakers to advocate on behalf of public pensions and help shape the future of retirement.