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How 401(k) Accounts Widen Race/Ethnic Wealth Disparities

TCF fellow Harold Pollack takes a deeper look at the data that shows how race affects an employee's 401(k) savings account behavior. He says that although most employees contribute a similar amount to their accounts, minority workers were more likely to invest with caution, even if that means low rates of return.

In effect, these workers were using their 401(k) accounts as current savings reserves or as an emergency fund. As my writing collaborator Helaine Olen noted over email, these apparently foolish savings behaviors suddenly seem to make a lot more sense in the life-context of the people who are actually making these decisions.

Pollack's article from Washington Monthly can be accessed here.

Tags: savings accounts, minorities, fiscal policy, 401k

Middle-Age Blacks Have Less in Their 401(k)s Than Young Whites

There's more to a 401K savings account than meets the eye, particularly when looking at factors such as age and race. TCF fellow Harold Pollack explains the ways that intergenerational wealth disparities play a role in a worker's ability to save for retirement.

Differences in financial sophistication certainly play an important role. An improved system might help employees make better choices. Minority workers at this firm strongly favored safer asset classes such as money market funds that provide very low returns over the long-run. An opt-out system with simple, low-fee target date funds could be especially helpful.

Read Pollack's full article featured in The Washington Post.

Tags: wealth inequality, social security, retirement security, 401k

The Rocky Road to Taking It Easy

Will Social Security go bankrupt by 2030 like policy makers on both sides of the aise have claimed? TCF fellow Jeff Madrick says think again. Madrick discusses Social Security reform and suggested reading for those looking to learn more about proposed approaches to Social Security reform.

Uninformed political rhetoric is likely to rise in volume as the presidential political season approaches, and two books under consideration here are particularly useful in clarifying the difficult choices in dealing with Social Security. They both argue that American workers face a serious shortfall in retirement income that the nation is not dealing with. The crisis, as noted, is caused, first, by the falling level at which Social Security benefits replace preretirement income, a fact not well known, and, second, by the sharp reduction in private pension coverage, which has not nearly been compensated for with 401(k)s that were supposed to take their place. These are tax-advantaged retirement accounts, sponsored by employers, but managed by individuals themselves. Individuals can also place tax-advantaged dollars in savings accounts known as individual retirement accounts, or IRAs. The shortfall is further exacerbated by low levels of regular savings among Americans and recent losses on the values of homes.

See Madrick's piece in The New York Review of Books.

Tags: social security, retirement security, retirement, debt

For New Congress, It’s Same Old, Same Old

Despite newly re-elected Speaker John Boehner's affirmation of compromise in his opening speech for the 2015 legislative session, it looks like the GOP is already up to its old hijinks after just a few weeks. First, the Republican House cohort has already caused an upset in Social Security policy, particularly with disability benefits, which is slated to run out of funding next year. Unfortunately, Republicans are unlikely to vote for any tax increase and Democrats are unlikely to agree to benefit cuts, leaving program funding that is scheduled to expire little hope for reinstatement. Michael Cohen mentions several other bills already passed by House Republicans including:

In addition, Republicans pushed through another effort to fund the Keystone pipeline, even though President Obama has made clear he intends to veto the legislation. Another rule change would force the Congressional Budget Office to do something called “dynamic scoring” on the economic impact of legislation. This change will make it easier for Republicans to propose tax cuts that appear revenue neutral, while actually blowing up the deficit.

The full article is featured in Boston Globe.

Tags: tax reform, social security, john boehner, gop congress

How Obamacare could reduce crime and incarceration

TCF fellow, Harold Pollack has been quoted in an MSNBC article about Obamacare's impacts on crime.

By expanding coverage for substance abuse treatment, Obamacare could potentially help reduce crime and incarceration — provided that beneficiaries can actually access the help they need.

Researchers at Emory University found that expanding health care coverage increases the use of substance abuse treatment and reduces aggravated assault, robbery, and larceny, according to their new working paper for the National Bureau of Economic Research.

Read the full article.

Tags: obamacare, incarceration rates, healthcare system, health insurance, crime, affordable care act

The best cancer care isn’t always the most expensive

TCF fellow Harold Pollack analyzes for Wonkblog the Institute of Medicine's new report, "Delivering high-quality cancer care: charting a new course for a system in crisis." The IOM's recommendations, Pollack writes, "are so obvious and yet would be so difficult to execute in our high-tech but unwieldy, costly and fragmented health-care delivery system."

"The IOM  makes plain that our cancer care system is particularly poorly organized to properly care for people with advanced cancers."

 

Social Insurance

Social Insurance

Compared to other advanced nations, America’s retirement security and health care systems offer weaker protections against risks we all face. The Century Foundation’s work focuses on ideas for strengthening Social Security, pensions, and health care – including steps for building on the Affordable Care Act.

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