April 15, 2004 • Volume 12 Number 15
Munnell to Discuss Benefits, Limits of 401(K) Plans
It's the question Americans are asking more frequently, and more apprehensively: Will my 401(k) plan provide sufficient retirement income?
Drucker Professor of Management Science Alicia H. Munnell will offer some answers and insights on the retirement issue at tonight's "Writers Among Us" discussion to be held at 7:30 p.m. in Cushing 001.
Munnell, who is director of BC's Center for Retirement Research, and Annika Sunden, a research associate at the center, are co-authors of Coming Up Short; The Challenge of 401(k) Plans, a highly-acclaimed analysis of the pros and cons of the popular employee-driven pension income strategy.
"The most serious mistake that many 401(k) participants make is cashing out their accounts when they switch jobs," said Munnell. "Other common mistakes are choosing an asset mix that is either too cautious or too risky; failing to rebalance their portfolios on a regular basis; and failing to shift their asset mix as they age.
"One way to avoid these mistakes is for employers to establish plans with prudent 'default' options built in so that individuals are automatically steered in the right direction, but still allowed the freedom to make different choices."
Munnell and Sunden's book, published by Washington's prestigious Brookings Institution Press, was written for a broad audience. Although the book's topics are of great interest to business and labor leaders as well as Washington policymakers, it is written in terms easily understood by interested investors who are not professional economists.
Coming Up Short has received a number of favorable reviews from national and international publications. An article published in a February issue of The Economist, an authoritative source of analysis on world business and current affairs, described Munnell and Sunden's recommendations as "an ingenious way of guiding choices in pension saving without compulsion."
A former member of the President's Council of Economic Advisors, Munnell was assistant secretary for economic policy in the US Treasury Department from 1993-95. Previously, she spent 20 years at the Federal Reserve Bank of Boston, the last nine of which she was senior vice president and director of research.
Among her numerous publications, Munnell has authored the books The Economics of Private Pensions, Pensions for Public Employees, and The Future of Social Security.
Munnell's appearance at tonight's "Writers Among Us" event is sponsored by Boston College Magazine and the Boston College Bookstore. Admission is free. -Reid Oslin •