The Long View: Anne Tergesen on What Retirement Looks Like Today

Episode: Anne Tergesen: What Retirement Looks Like Today
Release Date: October 29, 2024
Hosts: Christine Benz and Amy Arnott
Guest: Anne Tergesen, Wall Street Journal Reporter on Retirement

1. Introduction to Anne Tergesen

Christine Benz and Amy Arnott open the episode by introducing Anne Tergesen, a distinguished reporter from the Wall Street Journal who specializes in retirement. Anne’s insightful coverage encompasses a broad spectrum of topics, including 401(k) plans, retirement savings, spending behaviors, legislation, employee benefits, longevity, and aging. With a robust journalistic background, including accolades like the Front Page Award from the Newswomen's Club of New York and a finalist position for the Gerald Loeb Award, Anne brings a wealth of expertise to the conversation.

2. Anne’s Journey into Journalism and Retirement Reporting

Anne shares her initial passion for journalism, inspired by the iconic Mary Tyler Moore Show. Reflecting on her early days at the Philadelphia Inquirer, she describes the newsroom environment as "riveting" and filled with diverse characters, including those covering the cops and the Mafia (02:09). Her transition into personal finance and retirement reporting was significantly influenced by a fellowship program at Columbia University's Graduate School of Journalism, where she developed a fascination with accounting, finance, and macroeconomics. This academic pivot became the springboard for her focus on the intersection of macroeconomic data and financial markets, ultimately leading her to cover personal finance and investing (02:57).

3. Sources of Inspiration and Story Selection

When discussing her process for selecting stories, Anne emphasizes a shift towards incorporating academic studies and real-world data into her reporting. She states, "We're increasingly focusing on what’s going on in the news and bringing real people's voices and experiences into our writing" (04:24). This approach ensures that her stories are both relevant and grounded in tangible data, particularly from sources like Vanguard's comprehensive 401(k) data.

4. Insights from Vanguard’s How America Saves Report

Anne delves into the latest findings from Vanguard’s How America Saves Report, highlighting two primary trends: the gradual but steady increase in automatic features within 401(k) plans and the persistent issue of "leakage." She notes the rise in automatic enrollment, target date fund defaults, and automatic escalation of contributions, which have collectively led to climbing savings rates (06:37). Conversely, leakage—where individuals withdraw funds, especially during job changes or financial hardships—remains a significant challenge compared to more restrictive systems in countries like the UK and Australia (06:37).

5. The Impact of Automatic Enrollment and Escalation

Anne evaluates the success of automatic enrollment and escalation programs, acknowledging their positive impact on increasing savings rates. She explains, "Savings rates in plans with automatic enrollment are actually higher than in plans that don't automatically enroll" (08:08). However, she also points out potential downsides, such as individuals inadvertently taking on more debt or foregoing personal savings opportunities due to these automated systems (20:24).

6. Employer-Tied Retirement Plans vs. National Auto IRA

A significant portion of the discussion centers around the limitations of employer-tied retirement plans in an era of high job mobility. Anne compares the U.S. system to Australia's more centralized approach, where retirement accounts remain consistent despite job changes. She argues that while a national Auto IRA program could offer more stability and inclusivity, political skepticism towards government-backed centralized systems presents a substantial barrier (11:52). States like California, Oregon, and Illinois have begun implementing their own programs, but this state-by-state approach creates a patchwork system where access varies widely (14:23).

7. Innovations to Expand Retirement Plan Access

Addressing the issue of workers without access to employer-sponsored retirement plans, Anne discusses potential solutions inspired by international models. She advocates for mandatory retirement savings programs, akin to those in the UK and Australia, which ensure broader participation regardless of employment status. Anne highlights the ongoing efforts by individual states to adopt similar measures, recognizing the benefits such as serving as a pseudo emergency fund for lower-income workers (15:43).

8. Profiling Real-World Retirees

Anne elaborates on her collaborative work with Veronica Dagger in profiling retirees from diverse financial backgrounds. These profiles provide nuanced insights into how different retirees navigate their financial landscapes. She explains the challenges in finding willing participants, noting that they often come from two categories: "very open personalities" and "those who are really into investing" (20:50). Techniques for recruiting participants include extensive networking and embedding feedback forms within articles to streamline the selection process.

9. Happiness and Satisfaction in Retirement

One of the most compelling themes Anne explores is the high levels of happiness and life satisfaction among retirees, regardless of their financial standing. Drawing from academic literature on adult development, she observes that individuals often become more positive and focused on meaningful relationships and activities as they age. This phenomenon aligns with the "U-shaped curve of life satisfaction," where happiness dips during middle age but resurfaces in later years (26:43).

10. Debating the Existence of a Retirement Crisis

The podcast engages in a nuanced debate over whether a retirement crisis exists. Anne references a Q&A she conducted with economists Alicia Manal and Andy Biggs, showcasing divergent perspectives based on their interpretation of data. Manal’s view suggests a substantial portion of the population cannot support their current lifestyle in retirement, affirming the crisis. In contrast, Biggs offers a more conservative stance, acknowledging individual crises but disputing the pervasiveness of a national crisis (45:35). Anne concludes that while some face significant challenges, the reality is complex and multifaceted.

11. Challenges in Retirement Decumulation

Transitioning from saving to spending poses psychological and practical challenges for retirees. Anne recounts instances where retirees, despite substantial savings, struggle with the shift to regular expenditure. This difficulty is often rooted in ingrained saving habits, where individuals become overly frugal, as exemplified by a retiree who obsessively compared prices for basic necessities until he realized the negative impact on his happiness (42:14). The importance of establishing safe spending rates and seeking professional financial advice is emphasized to navigate this transition effectively.

12. Evolving Personal Perspectives on Retirement

Reflecting on her own evolving views, Anne shares her growing awareness of retirement planning. While she admits to a lack of concrete planning, her journalistic work has deepened her understanding of how perspectives on retirement evolve over time. She highlights the ongoing personal development and shifting priorities that accompany aging, suggesting that retirement is a dynamic phase rather than a static endpoint (50:23).

13. Conclusion: Embracing the Complexities of Modern Retirement

Anne Tergesen’s comprehensive exploration of retirement underscores the intricate balance between structured savings plans and the personal realities of retirees. The episode highlights the successes and shortcomings of current retirement systems, the resilience and adaptability of individuals in retirement, and the ongoing debates surrounding a potential retirement crisis. Through engaging dialogue and insightful reporting, Anne provides listeners with a deeper understanding of what retirement looks like today and the multifaceted challenges and triumphs that accompany it.

Notable Quotes:

• Anne on her love for journalism inspired by Mary Tyler Moore:
  "I would just love that show. I wanted to be like that." (02:08)

• On the rise of automatic enrollment and escalation:
  "It's a big statement about the power of automatic enrollment over time and combined with automatic escalation to get people to higher savings rates." (17:53)

• Discussing retirees' happiness:
  "People become more positive, more glass half full. Their life satisfaction tends to grow." (26:43)

• On the retirement crisis debate:
  "There is a retirement crisis if only half of the public can support their current level of consumption in retirement on their savings." (45:35)

This summary encapsulates the key discussions, insights, and conclusions from the podcast episode, providing a comprehensive overview for those who have not listened. Notable quotes are highlighted with proper attribution and timestamps for reference.