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Retirees brace for rising rates | NBR

22 April 2014—Kevin Cahill, Center's Research Economist was mentioned on nbr.com.

In 1980 the vast majority of private-sector workers with pension plans had defined-benefit plans, according to Kevin Cahill, a research economist at the Sloan Center on Aging & Work at Boston College. Defined-benefit plans are funded and run by employers and provide beneficiaries with a guaranteed stream of income. Defined-contribution plans—the most common of which are 401(k) and 403(b) plans—are funded by employees, although employers often provide matching contributions. Under these plans, employees choose from a menu of investment options, and returns aren’t guaranteed.

“The issue with 401(k)s is that the individual is in charge of investing and spending down their assets, said Cahill. “They assume the investment risk and the longevity risk, which is the risk of outliving your assets.”

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