The U.S. is in a retirement crisis—but here’s what we can do

– Q –

You’ve been working in financial services for decades. How have you seen retirement needs change in that time?

Kourtney: Our country is in a retirement crisis. In 1975, about 70 percent of retirement plan participants actually had access to defined benefit plans. So, they had access to a guaranteed income stream, whether they were firefighters or worked for a corporation. Today it’s only 12 percent. Meanwhile, many older investors are living longer—they’ll also run out of money. And when millions of Americans are financially vulnerable, none of us are truly secure.

– Q –

I know you started out at a minority-owned financial services company. What eventually drew you to work at a company like TIAA?

Kourtney: The company’s mission resonated with me, to help those who help others find confidence in retirement. Founded over 100 years ago to help teachers retire with dignity, our reach now extends well beyond education. We stand hand-in-hand with more than 5 million clients to help fortify their money and ignite their dreams. And in the absence of defined benefit plans for most Americans, we are actually able to tell people that we can offer them a paycheck for life. We’ve never missed a single payment to our retirement clients since we were founded in 1918.

– Q –

I want to take a second to talk about why women typically retire with less money than men, particularly moms, and then just what specific issues women face in saving for retirement.

Kourtney: I’m a mom of four, and my oldest is six. So, I can relate to this one. But typically, women are retiring with 30 percent less in retirement than men. That’s because women still are earning less compared to men. Then there’s also the unpaid work that comes in the form of raising children or caring for elderly family members. Women are also living longer than men, but they retire earlier, so their retirement funds need to stretch farther. It’s particularly urgent that women understand the headwinds they have so they can mitigate as quickly as possible.

– Q –

Does the retirement crisis affect certain groups of women more than others?

Kourtney: Yes, and this is an important distinction. According to the Federal Reserve, as of May 2023, only 64 percent of Black Americans have any retirement savings, as compared to 81 percent of white Americans. More than half of all Black Americans don’t have enough to retire with security and dignity. The list goes on and on.

Meanwhile, women also carry a larger student debt burden, which makes it especially tough for them to save. TIAA actually launched a program in 2020 that helps non-profit workers achieve student loan forgiveness. Participants completing the 120-day program have an average projected forgiveness of more than $50,000 per person.

– Q –

How does the Retire Inequality campaign seek to address these disparities?

Kourtney: We’re aiming to raise awareness of the retirement security gaps that exist out there by starting a conversation. Money is often uncomfortable for people to talk about. And when people aren’t secure in their knowledge about it, they’re even less likely to talk about it. So, first we have to identify what the problem is, admit we have a problem, and then talk about solutions to help people get on track for retirement.

If we inspire people to then go look at their 401K, and wonder “Am I saving enough? Do I contribute enough?”, that is a good starting point to help move people to action. I would say that no matter where you are on the path to retirement, the key thing is to envision your future beyond your working years. What will you live on? What standard of living do you want to have?

– Q –

What’s the number-one, most effective move a young person can make toward securing their retirement? What advice would you give them?

Kourtney: Pay yourself first. Get started now. Young people tend to think, “I don’t need to prepare, retirement is so far off,” or “I can’t save enough, so I’m not going to save anything.” Even a lot of the student loans self-adjust against what your income is, and that’s after you actually contribute to your retirement plan. So, there are just all kinds of little factors. Get started by saving a little bit, consistently. And continue to increase that amount over your lifetime.

Also, many people tend to think financial advisors are only for the wealthy. But that’s not the case. Everyone can benefit from talking with an advisor. And if your company has a retirement plan, make sure you contribute enough to get the company match. It’s free money!

– Q –

What is “lifetime income,” and how does TIAA help people create a more secure retirement?

Kourtney: Lifetime income—it’s exactly how it sounds. Basically, when you retire, you get a “paycheck” for the rest of your life. Lifetime income can serve as an additional lifeline for Americans who rely, or expect to rely, on entitlements like Social Security, which is a major source of wealth for many Americans. We believe that every worker should have access to low-cost investment options that help provide ample income for a dignified retirement. In addition to providing retirement plans for more than three-quarters of the nation’s higher-ed institutions, we now offer guaranteed lifetime income to corporate retirement plans so that more Americans can have the secure, dignified retirements we believe everyone deserves.

Learn more about TIAA’s Retire Inequality campaign and start building your retirement future today.

Paycheck is the annuity income received in retirement.  Guarantees of fixed monthly payments are only associated with TIAA’s fixed annuities.

Annuities are issued by Teachers Insurance and Annuity Association of America (TIAA) and College Retirement Equities Fund (CREF), New York, NY. Each is solely responsible for its own financial condition and contractual obligations.  Guarantees under annuities issued by TIAA are subject to TIAA’s claims-paying ability.  TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributes securities products.

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