SPEAKER_01 0:00

Hello and welcome to Retirement Navigator, the podcast for adults 55 and above who are ready to make their next chapter the best one. I am your host, Kwame Kwade, co-founder of Next Chapter Media and Adjunct Professor of Finance at Johns Hopkins University, Kerry Business School. Today I am joined by Andrew Ashtruth. Andy is the director of the Center for Retirement Research at Boston College, where he has been a key leader since joining in 1999. He previously served as deputy director and associate director for external relations before stepping into the director role in 2025. His work focuses on Social Security, expanding access to workplace retirement plans, and strengthening the nation's long-term care system. Andrew has also played a central role in shaping the center's communication and building relationships across government foundations and the private sector. He is co-author of Falling Short, the Coming Retirement Crisis, and What to Do About It and brings deep policy experience from his time at the US government accountability office. Thank you for being here, Andy.

SPEAKER_00 1:28

Thank you so much. I really appreciate coming opportunity.

SPEAKER_01 1:32

So I want to start from the top. So you are with the uh you are the director for the Center for Retirement Research at Boston College. So I want to start first with you know, what does the Center for Retirement Research exist to do?

SPEAKER_00 1:49

Yeah, uh that's a great question. Um our mission is to study, our mission is to try to improve the nation's overall retirement security. And we do that by trying to inform decisions that people make, um, both at the government level, so people who are designing the retirement systems that we all rely upon, Social Security, Medicare, etc., at the company level or through and through the financial services sector that serves companies and such as 401k clients, um, and also individual decisions individuals make themselves, um, you know, when declaiming social security, for example. So we are we we think of ourselves as we're not an advocate for specific policies or changes, but we do research to try to shed light and provide insights to help people make better decisions at all levels of society.

SPEAKER_01 2:47

Okay. And I know you've been with the Senate for three decades now, and uh you recently assumed the uh director position. What view does that provide you?

SPEAKER_00 3:00

Uh well it's definitely it's definitely a new so for most of the most of my career I've been have worked more on the communication side and and sort of external relations. Um so I thought a lot about how to get the information that we produce out to the world. And now I have to think more about what we're doing in the first place, um, and strategically how we want to position ourselves to make sure that we're providing the kind of information that people need for the problems we face today. So it's more that big picture level on what we're doing and what areas we should be exploring, um, rather than let me take the results of this and make sure the news media gets it and the financial professionals get it and government policymakers get it.

SPEAKER_01 3:48

Right, right, right. No, that that's awesome. Now, you describe yourself as a translator rather than an economist or a finance expert. Um so how do you think that that bridge building matters to the retirement conversation?

SPEAKER_00 4:06

Oh, I think it's very critical. Um it helps to have sort of less knowledge. So I I actually had I remember a uh an instructor I had in high school who used to say, like, uh, who was known as one of the best teachers in the school, and he was always very um aware of his own limitations in the sense that he said, Look, I'm not a genius at math. He was just like, that's why I can teach it better, because I have to work harder to understand the issues to explain it to 16 and 17-year-olds. Right. Um so I'm not an economist, um, but I have had to work throughout my career to explain the work that we're doing to an audience that's not technical at all. So I have to have enough technical knowledge, but that's not really my world, that's not where my head is all the time. Right. And so I'm I'm out there thinking like, how do I talk to the press about this? How do I talk to individuals about this? Right. Um, and so that that's constantly, I think of that act of translation as the core of what I do. And since most people aren't technical experts, that's why I think it's very important that translation function.

SPEAKER_01 5:21

Right, right, right. Now, you you talked about the press, you know, you've been dealing with the press for a long time. What do you think are some of the things that is missing in the coverage of retirement planning and the challenges that we're facing right now? What are the gaps that you see in the press coverage?

SPEAKER_00 5:44

Um, that's a good question. Uh, there's always somebody writing about something, but there's clearly areas that get a lot more attention than others. Uh, I guess one area that I would think more about is perhaps the non-financial side of retirement. The financial side is maybe more flashy in the sense that people are saying, oh, the stock market went up today. How did my 401k do? Or, you know, we looked at a new report that said that Social Security won't be able to pay full scheduled benefits starting in you know just six years down the road. And those are the things that kind of get that headline attention. Um, I think there are a lot of things that go on that important have a lot to do with how secure people are in retirement that aren't strictly financial. And a good example of that would be the sort of sort of social isolation that is a big challenge for older people, especially not usually in the early stages of retirement, but as they get older, and how to deal with that. And I think that's something that's more of a niche topic, it's not something that gets picked up in the media a lot. Um, we did a study a couple years ago that made me think more about these issues that are non-financial, which is we looked at there's surveys done of people, and they say, How do you feel about your retirement? How satisfied are you with your life? And you get, you know, you get a lot of people saying, you know, we're pretty satisfied or whatever. And then you try to see if that's related to how much money they have or even their health. And a lot of times it's not that closely related. So it's like if their life satisfaction is not that directly related to money, what else is going on that's important? And so that got me thinking more about you know the social connection and other issues that we could talk about.

SPEAKER_01 7:34

Right, right, right. And I want to dig deep into isolation as a topic uh as we get down uh with the with this podcast. Uh, I want to start uh first with um social security. Um that is in the news a lot. Um and you know, just in my own um content that I produce, um I have seen maybe five or six different um solutions to address the trust fund shortfall. Um and you know, we're inching closer. I know that the recent Social Security Fairness Act also chipped away at that you know recency of how soon we're going to get to that cliff. But but you know, when it comes to Congress, you know the solutions are everywhere and and everybody, you know, can say no to something, but nobody's saying yes to something. So in in your view where you sit, how would you explain to our audience what this Social Security shortfall is, how serious it is, and what do you think the possibility that Congress will really do something about it before the time runs out?

SPEAKER_00 8:48

That's a great question. And obviously, a lot of people with good reason are concerned about what they read about the program, uh, whether they're in retirement or they're nearing retirement. I guess let me start with the it's a serious problem. Um, it is a very serious problem, but it might sound worse than it is to people who are you know not that familiar with the program and how to understand um the financial reports that come out. So within six years, um the program currently is paying out more money than it brings in. So it has a reserve account that it's spending down right now, and in about six years, luckily under current projections, um it would not have enough in that reserve account to draw on to continue to pay the full benefits that are scheduled under current law that people are currently receiving or planning to receive.

SPEAKER_02 9:44

Right.

SPEAKER_00 9:44

In that, if that happened, and that's a big if, because I'm gonna say we're not gonna get there and we're not gonna, I don't believe that we're gonna get to the point where there would have to be an across the board immediate benefit cut. Nobody wants that. Um, even members of Congress who've been dragging their feet on this issue will wake up in a hurry once that gets close and closer and closer and closer. Um, so I don't think that's gonna happen. But that worst case scenario would be if nothing happens, no action is taken, people would still get between 75 and 80 percent of the scheduled benefits.

unknown 10:20

Right.

SPEAKER_00 10:20

So that's really bad. They would have to take the cut. But again, that's the worst case scenario, and I don't think that's gonna happen. Um, and as you said, we can I can go to this further, but there are plenty of ways one, I think action will occur. I guess that was one of the questions you said. I fear that it will occur just a couple of years before the deadline.

SPEAKER_02 10:40

Right.

SPEAKER_00 10:40

Um, that is what happened in the early 1980s, the last time that um policymakers made it had a major passive major social security reform package. They went pretty much up until six or eight months before the reserves were about to run out. That could easily happen again, especially in this current environment. I hope that it is handled sooner than that.

SPEAKER_01 11:02

Right, right. Now, are there any particular policy solutions that you think it's likely to be to have broad support, uh, given the options of bringing in more money into the system or slowing down how much money is going out of the system? Are there particular policy prescriptions that you think are more likely uh to be passed?

SPEAKER_00 11:26

I do think um it will probably be some mix of revenue increases and spending reductions. I do I wouldn't be surprised if the revenue increases were a more important part of that because survey after survey after survey finds that people really value the program and its benefits, and it's hard to find people saying, like, yeah, we should we should cut the benefits either for themselves or for their kids. As a practical matter, um, it's quite likely that there might be some benefit reductions in the mix when when the decisions are made. Um one of the most popular decisions, I'm sorry, policy options, not surprisingly, is raising the cap wage cap. So currently wages um are not subject to the Social Security uh payroll tax over around, I think it's currently around 175,000 in that neighborhood. It goes up a little bit every year. Um so that's that's a very popular proposal to at least move that wage cap up.

SPEAKER_02 12:27

Right.

SPEAKER_00 12:28

And maybe not take it off entirely, but to move it to a higher level. Um that by itself doesn't solve the problem, but it helps significantly. Uh you could see an increase in the payroll tax rate. Ideally, it would be phased in perhaps over time, and it wouldn't be a gigantic increase. Um that could happen. It's plausible that we might raise the full benefits retirement age further. That would be that is essential. That is a benefit cut. Some people think it's a third factor. It's not you could, it's a type of benefit cut.

SPEAKER_01 13:02

Yeah.

SPEAKER_00 13:02

Because you get less no matter what age you claim.

SPEAKER_01 13:04

Right, right, right, right. And and and you know, one of the things that you said, and I'm glad you you framed it that way, it is a benefit cut if they raise the retirement age, because you know, even currently at age 66, 67, if you claim at 62, you are getting a percentage, 30% less. If they raise that to 69 or 70, and you claim at 62, there's a big gap between you and your full retirement age. And so you are getting so yes, it definitely is a benefit card. One of the things I want to go back to and help people understand how did we get here that Social Security Trust Fund is running out of money. Um, there are some demographic issues that are happening. So, in your view, how did we get here?

SPEAKER_00 13:52

So, the first thing to understand, this is a really good question. The first thing to understand is that Social Security was never set up financially, essentially since, well, maybe initially, but after the first few years, there were some amendments to the program. So when the program really got up in running, it's um it's what is called a pay as you go program. Uh, that sounds like a technical term, so let me just explain it in really simple terms. The money that gets paid out is is the same money that's coming in in revenue each year. In other words, in a pension plan, a traditional kind of pension plan, if you work for a company, or even in your 401k plan, it's different because you get what ends up in the account at the end. But in a traditional pension plan, um, you would get uh the plan would have contributions from the employer and employee, those would be invested, and ideally the goal is that you would be saving the money as you go along that would allow you to pay the benefits when people retire. So Social Security doesn't work that way. It just taxes people today, brings in a bunch of money, and hopefully it has enough to spend out and cover all the benefits. But there's no connection, essentially, between uh at a high level what it's taking in and what it's supposed to spend.

unknown 15:08

Right.

SPEAKER_00 15:10

So that is one factor. Um the demographic factor you mentioned is really important for why it's happening now. Um, the population's been aging, baby boomers are moving. Well, they're basically all in retirement right now, almost all of them. Um and so that's a bigger draw of the system. We're paying more money out to pay the benefits of retiring baby boomers. At the same time, um, we're not having as many babies in this country, and so when we haven't been for a long time, and so that uh we have fewer workers than we might prefer to have, uh, and so there's less money from the workers going into the system since they're the ones paying the current taxes.

SPEAKER_01 15:55

Right, right, right. And and so one of my audience, you know, is you know, 65% of my audience is age 65 and above. Um, and whenever I talk about this topic, one of the comments I get often is, you know, Congress should pay back all the money that they have stolen or have taken, whatever phrase or word you want to use, it's been used that Congress took money out of the system and never paid it back. And if they only paid that all back, everything will be okay. What is your response to that?

SPEAKER_00 16:31

Um I understand why people would ask that question to think that way. And it does reflect somewhat of a lack of understanding of how the system works. I sympathize with the idea behind what they're saying, um, but I can explain practically why that why that won't happen that way. So the system was set up to accumulate some reserve. So that that could be that's one reason people think that, well, we are setting some money aside, that's true. That's to that's to ensure that if we had an economic shock, we wouldn't have to stop paying benefits or something like that. So there's always been a reserve associated with the system. Um, and we can dip into that reserve when we need to. But as I said before, that reserve isn't set up to match any specific need on the back end. Um, so what happens is if we have more money um than we're spending, then we put it in a reserve, and that reserve is only allowed to invest in federal government bonds, only allowed to by law. So we can't you can't do what uh a normal pension plan would do, IBM or Ford Motor Company, and go and say, all right, I'm gonna put this 60% of this in the stock market and 30% in corporate bonds and 10% in something else. You could only invest in government bonds. So that limits the return you're going to get on any savings that are accumulating in Social Security. Um, now the good news is that it's not that that those those are promises, those bonds represent promises that Social Security has or a claim on the federal treasury. When Social Security needs the money, they go to the Treasury, Treasury says, Oh, I see you have a bond here, I will pay you for that bond. Then Social Security uses that to pay tenants. So there's nothing um untoward, there's nothing bad going on, everybody's following the law, and nothing's getting stolen. The notion of stealing probably comes from the idea that Congress may decide to run larger budget deficits than it otherwise would run when it pays for all other government operations, whether it's the military or food stamps or other kinds of social assistance or food inspectors or the National Park Service. Um it benefited when Social Security was bringing in more money than it was what than it was than it was spending. That was beneficial to the rest of the government because that reduced their need to borrow from somebody else because they were borrowing from Social Security. They didn't have to go to the private market and borrow a dollar because they had that dollar from Social Security. So, in that sense, you could argue at a high theoretical level that the money was spent, but that doesn't mean Social Security won't get it back.

unknown 19:30

Right.

SPEAKER_01 19:34

Right, right. No, no, no, no, that's that's perfect. And and that segues into um one of the things that I read from you know, you call yourself a pre-retiree. And so I am wondering how your own retirement planning, you know, one of the we call ourselves next chapter media because we believe that retirement is changing. Um people are living longer, living well longer. The typical retirement is longer, and I don't even know if our social security was even designed for that length of retirement. And so people are thinking about retirement differently because it could be 30, 35, 40 years that you have to plan for. How are you thinking about your own retirement given what you see on the horizon?

SPEAKER_00 20:28

Uh always take it every opportunity. I've always been very fortunate to have access to an employee, um employer-sponsored retirement plan, a 401k type plan. And so if you're in that fortunate position, the obvious thing to do at the beginning, and I had someone advise me this before I was even eligible for the plan in my first job, because I had to wait a little, I think it was a year before you could you could be involved in the plan. And at that point, um he said, sign up and make sure you put in enough money to get the full match from the employer. Because most employers with a retirement plan, even if it's a smaller company, they do have an employer, an employer, or an employer match. So you put in a dollar, they might put in 50 cents up to a certain level. Um, it's very important to take advantage of that full match because if not, you're kind of leaving free money on the table. And one piece of research that I will plug here that we have coming out, it's not something we did ourselves, but we're helping to publicize to work. Um, looked at how couples coordinate their 401k matches, and they found that a lot of people, not surprisingly, they don't talk about this at the dinner table. And so for any given amount of saving the household plans to do the two spouses, they may not be maximizing the most they can get. So they could that doesn't mean they have to max out on both matches. That would be great if they could do that. But if they can't do that, they should at least maximize the better, more generous match. Because oftentimes some companies will have a more generous match. Generous match than in other companies. So that is one really important element of planning. I try to pay attention to the notion of I probably don't want to have, well, this is an advantage of target date funds. So if you don't want to have to think about changing the mix of stocks and bonds that you have over time, one convenient way that that can be done for you is through a target date plan where that automatically happens. Essentially, you pick a date that's roughly consistent with your retirement date, and there will be a fund to match that through the mutual funds offered through your employer plan, usually. And then that makes things a lot simpler. I'm also trying to figure out how to finance long-term care for myself. And I have it still in the still in the thinking phases on that, but planning ahead for expenses that aren't going to be covered by Medicare, that's very important to take into account. You might not need a nursing home, but you might need home care. You might need home care for a while. And a lot of these types of care are expensive. So I think that's something that people overlook. They're like, well, maybe I won't need it, or maybe my kids will take care of me. You don't want to count on that.

SPEAKER_01 23:11

Right, right, absolutely. And and and that's a perfect segue to you know the issue of aging parents, uh, the sandwich generation. Um so one of the one of the topics that I don't think gets enough visibility is the caregiving crisis that we have, both in provider um availability, uh cost um of caregiving, and also the issue that you have you know the sandwich generation in the middle where they have aging parents and then they have their own kids to take care of, and then the burden of that and the guilt that comes with it. So the first question I wanted to ask is you know, where do you think the policy shortfalls are when it comes to addressing the caregiving crisis that we have right now?

SPEAKER_00 24:07

Uh yeah, well, let's see. I'll start with an easy one. This is a very hard question and a really important question. And I wish I knew like some magic wand answer. I think everybody wishes they knew some magic wand answer. So I don't knew I don't have that. Let me start with a simple one, which is um according to um KKF, which is a healthcare uh KFF, sorry, a healthcare research organization, um, about 28% of the caregiving workforce, the paid caregiving workforce, um are immigrants. And my concern right now, and so we know also, Kwame, I I think is probably a lot of people out there trying to find care themselves. There has been a persistent labor shortage on the formal caregiver side, whether it's at a nursing home or it's having someone to come to your house and help you with basic activities that you need to live your life. Um, there's been a there's a current labor shortage and a fairly significant one that can make it more difficult to get the care that people need.

SPEAKER_02 25:16

Right.

SPEAKER_00 25:17

So one thing we need to do is make sure that we don't discourage the current workers who are in that workforce from going and doing something else or leaving the country.

SPEAKER_02 25:28

Right.

SPEAKER_00 25:28

Um, and I'm not talking about when we separate out legal versus uh other than legal or undocumented, whatever you want to call it, illegal versus legal. I'm talking about legal immigration, right? And I think we need more of it, and we need more of these kinds of people in the workforce. And I think the kinds of policies we're pursuing right now are discouraging legal immigration and might be driving people who are here and actually have documentation and can work here to leave.

SPEAKER_01 25:57

Right.

SPEAKER_00 25:58

So I think that's a bad idea, and we should stop that, and instead we should have more legal immigration.

SPEAKER_02 26:04

Right.

SPEAKER_00 26:05

And more legal immigration would help one aspect of the care crisis that we're talking about of the challenge that we face by shoring up that workforce. You don't want to take a workforce that's already too small and keep shrinking it.

SPEAKER_01 26:17

Right, right, absolutely. And then can you speak to the financial um aspect of it, the the affordability, and how people become unaware or surprised when they confront have to confront the cost of caregiving, even if it's at home. Um, are there any not policy solutions, but how should we be thinking about this, given that retirement is longer now?

SPEAKER_00 26:45

Yeah, really, really good, uh, really good question. Um, for people who are very low income and have very little assets, there is Medicaid assistance, not Medicare, but Medicaid if you qualify for Medicaid. Um, and that can be difficult because the means tests are pretty strict, meaning that you have to have very low income and very low assets to be able to qualify. If you are in that position, the good news is that you can get your home and community-based services or your nursing home care covered by, or portions of it at least, significant portions of it covered by Medicaid. So the very low income have a fairly effective insurance option through Medicaid. Now, a lot of people don't, as I said, don't qualify for Medicaid, so let's go up a level. What about the people in the middle to um, I don't know, the the broad middle class, let's say. Um, and there we are seeing some policy solutions. There have been a there's been a problem with the private insurance market, is that it's been hard for the market to get the economics right. It's kind of hard to figure out like who's gonna buy the insurance and then how how long they're gonna live and how many needs they're gonna have. And so there was some difficulty in figuring out these variables looking far in the future. And the bottom line is that the long-term care insurance market is not a robust, the most robust it could be, and very few people end up buying the products and they're often very expensive. But you can, that is an option for some people to look at is consider buying private long-term care insurance. Um, what they're doing in Washington state is an experiment with the government being more directly involved, um, almost like uh in running this through the payroll tax system, they have a small addition to their payroll tax that provides um it's gonna provide all workers with something like uh $35,000, which isn't a lot, but it's not nothing. And I think it's indexed to inflation. So they'll have that going forward. Um, so they'll have a little core benefit from the state program that they paid into, like you pay into Social Security or Medicare. Um, and that's something that a lot of other states are looking into right now, and I think that might be helpful for a lot of people going forward.

SPEAKER_01 29:04

Right. I know you wrote about your own parents' experience in in in one of the SAPstack articles, I believe. Is that something you want to you want to talk a little bit about and then how that has informed your own thinking?

SPEAKER_00 29:19

Yeah, I think it's I actually this is very important getting back to the question of social isolation and the non-financial elements of retirement. Um as I said before, if you if you don't have strong social connections throughout retirement, you're much more likely to develop depression or other kinds of mental illnesses or just be flat out lonely, whether it's not a clinical condition or anything like that, um, and your quality of life is going to suffer no matter how much money you have.

SPEAKER_02 29:49

Yeah.

SPEAKER_00 29:50

So in the situation with my parents, um, well, I'll start with. So my my mom was very gregarious, outgoing kind of person. Uh, I told a quick anecdote in our family, which is kind of legendary, is that one time she walked into a grocery store, she struck up a conversation with someone else who was shopping, and before the end of the conversation, she'd gotten a wedding invitation to somebody's wedding and met her family at this point she just met. I think it might have been the woman herself invited for my name. Um so she was very social, um, but she had a lot of health limitations as she got older, and she had a hard time getting out of the house. Um and her her world just narrowed. It just got narrower and narrower and narrower. And you know, she had my father as a caregiver who did his best and did all that he could for her. At some point, um, they needed to make the decision about going to assisted living. It was a hard decision because most people want to stay in their home, understandably. But she did do that, and we we were all a little bit concerned about how that might work out, but it turned out for at least the first couple years and before COVID happened and things like that, um, she actually was her quality of life improved significantly. She was much more optimistic, she was much happier, um, she was less stressed by not having to worry about um not having to worry about as many things. So her needs were taken care of. Um, my dad was able to come and spend time with her as a spouse and not as a caregiver, which I think was very important for their relationship at that time. Um, and so she she just kind of had uh one one social worker who knew her said that she'd have sort of a renaissance or rebirth um at this period for the for this period when she'd gone into assisted living. Obviously, there's a lot of staff there, there are a lot of residents, so she was able to talk to people, she had lunch companions and all that, all that. So that was one example of uh a solution, I guess, of a kind, not the solution most people would prefer, and I don't think she preferred. Right. But when she was in that situation, she was able to have um some dignity and quality of her life toward the end.

SPEAKER_02 32:10

Yeah.

SPEAKER_00 32:11

And my yeah, I would I could add more to my father's experience if you no, go ahead. Yeah. So more quickly, so my father now is a you know widower in his um early 80s, and um he was faced with, you know, we were concerned like he's living by himself, he doesn't have a mom anymore. He was not as, I would say, not as naturally extroverted as she was, but he did live in the same community his whole life, so he had connections in the area. The thing that got to me though, he ended and ended up doing great in that situation from a social standpoint. He had friends, he was playing tennis, he was going out to lunch with people and breakfast with people, and uh he had networking through his church and all kinds of card playing and all kinds of activities. He had this constant social whirl about him where he had a schedule almost every day of what he was doing with other people. And one piece of wisdom he gave me that kind of blew me away was he said, you might notice that most of my friends are 10 years younger than me. He said, I've done that on purpose. I don't want to outlive them.

SPEAKER_01 33:20

Wow. That's that's deep. Thank you for sharing that. Thank you for sharing that. I mean, I was reading the piece about social isolation, and and that, you know, I think you mentioned that briefly earlier, that you know, uh at that stage, you know, uh relationships become even a much more big determinant of satisfaction than than financial means, you know, because uh the world shrinks so much very quickly, either because you know friends are passing away, and so it's important. And so, you know, in in your experience, uh, you know, uh and and uh the sandwich generation is dealing with that right now and they're making difficult choices. Are there any uh policy options here in terms of like how because a lot of people want to age in place, um and and and anything that's on the horizon that you've seen or anything that you know politicians should be thinking about when it comes to the the crisis of isolation?

SPEAKER_00 34:27

Uh that's a really good question. I mean, there there are very this is this is where I come back to when I was thinking about social isolation, I realize that it's hard to come up with one size fits all answers because people are so different. Right. Um I know, for example, uh one one thing that I had some experience with was uh the local senior center in my town.

SPEAKER_02 34:54

Right.

SPEAKER_00 34:54

And I never had parents who use that because my parents didn't live to buy, but um but I was on the the advisory board for that center for a while, so I learned a lot about the kinds of services that are offered there. And it's a gem. I don't know, these community gems. I think you know most many communities have them. I certainly assume very small communities probably do not, but um in Massachusetts they're very common. Um and some of them are terrific, and they provide a social hub for interaction. You can do you can play um cards or games, you can do exercise, they have a little gym. Um, you can play pickleball, you can play, you can uh go to lectures, you can learn about nutrition. I mean, there are all kinds of things and activities that you can do. So I think if people can, and there's transport, and they provide some transportation too, to some degree. And that's really important for the people who don't live very close to these kinds of facilities and or don't drive anymore. So I think investing in those local government solutions, maybe more. I mean, they could always use more money to expand their programming and um provide more staff, they can help you with your taxes, right? They do all kinds of stuff. So I'm very big on these like community senior centers, uh, whether they're government or they could be nonprofit. But um in any case, um, that's one thing. I think just being aware of the workforce issues I talked about and trying to, there are states, a number of states that will pay family caregivers who are providing services to older adults, older relatives, they can get paid through this is through Medicaid, so you have to have some use on Medicaid. Right. But um, that's a big deal for caregivers because a lot of times they're taking time out of the workforce.

SPEAKER_02 36:46

Right.

SPEAKER_00 36:46

And so if they can get reimbursed a little bit, that takes a little bit of the financial stress off the family caregiver. Um that's another option. There, that's something we're investigating every day. What works better? And I don't know, Tommy, like big picture, like what all the solutions are. Right. But um there are a lot of smaller solutions that I think work in certain situations.

SPEAKER_01 37:07

No, that's very helpful. And I'm glad you mentioned the family members getting paid uh through Medicaid because I know California has a big robust program around that, you know. I forgot what it's called, I'm blanking out on that. But you know, it is available, and I think it, you know, the the quality of life component to that is important because a lot of people would you rather get care from a family member they know, um, which also becomes consistent, uh consistency of care because of the connection. So um shifting topics a little bit to AI. Um I know I know your your your setup has been exploring AI in various ways. Um but one of the articles that I saw was AI and retirement planning. Do you want to talk a little bit about that?

SPEAKER_00 37:57

Uh yeah, so there's um that was written by a um one of our regular contributors to a blog that we um we provide on uh on our students website. And uh when the blog blog writer, his name is Luke Delorme, um when he had that idea, uh he pitches ideas to me and we talk about like what would be make a good blog post. And I said, Oh, I bet everybody would be really interested in that topic. Um he had just been at a conference of financial, he's a financial planner himself. He had just been at a professional conference where they've been talking about this. And I know everybody's worried about um, and rightly so, like what are the impacts on jobs and and what's going to happen. He did uh I was encouraged that he came away with an optimistic take on how AI can be used by planners to help people and also by people themselves.

SPEAKER_02 38:55

Right.

SPEAKER_00 38:56

His issue was he said, I'm not worried, you know. Basically, he wasn't that worried about like losing clients because they're all gonna go use AI now. He was saying usually people fall into two groups, those who have have the resources and the inclination to want to use the planner, and those who either don't have the resources or don't have the inclination to go with the financial planner and like to do it on their own. And he said either of those groups can benefit because the financial planner has a lot more powerful tools that will free up the planner's time to serve more clients if they can take advantage of AI in a number of different ways, and then the individuals themselves have much more powerful tools if they want to try to do it on their own.

SPEAKER_01 39:42

Right, right. Now I know there's so many places that you know it'll be interesting to see in the next couple of years where you know how AI affects um retirement um in terms of one services. You know, there's talk of robot, um, companions, uh robotic um caregiving. So there's so many things that you know in the next couple of years we'll see how it evolves. Um and and also the education part, you know, I think that a lot of people assume that older adults cannot use technology, which I found not to be true. Um but there's also a gap in education of how do you use these tools. So it will be interesting to see that. Um another thing I wanted to wrap up with two more questions, two more sections, and then we'll wrap up about the emergency savings for retirement. I know um I was looking at I think a LinkedIn post that you had put out, and it was saying that you know a typical retired household spends 10% of income on unexpected expenses in a normal year, and two in five cannot cover those expenses even for a year. What does that do?

SPEAKER_00 41:00

Well, I guess if you're in that situation, you end up either um foregoing some important repair, like let's say it's a home repair, or you have a you know a home appliance that doesn't work very well and you delay replacing it, um, it could cause some real deprivation. Or I guess the other alternative is that you put money on the credit card and you go ahead and make that purchase, but then it increases your consumer your debt, and that's high interest rate debt, obviously.

SPEAKER_02 41:30

Right.

SPEAKER_00 41:30

It would be better to avoid if you could. Um so it puts people in a difficult situation between choosing basic quality of life um needs and uh or running up higher debt.

SPEAKER_01 41:43

So and and and and and I guess it goes back to the importance of just you know, a lot of people don't think about you know, when it comes to planning, you're planning for long-term care, you're planning for all these things, the fact that emergency savings is a component of that. And for my audience, I'm trying to I'm bringing this up because it's also an essential element because then you are making decisions between medication and paying for because out of pocket costs for Medicare, you know, as I get more educated on it, is also substantial. You know what I mean? So Medicare does not cover a hundred percent. So you're making plans for medical coverage, but then also things that happen around your house that you need to be concerned about. And so I want to bring us back to the work of for your center. Um, what are some of the areas that you guys are looking at exploring in the next couple of years as you look at the horizon? What should we be looking to your center for in terms of work that you guys are looking to put out?

SPEAKER_00 42:46

Well, we're always interested in the future of social security, and as we've been talking about earlier, that um decision point is coming fairly quickly down the road for some major changes to the program's financing. Um, we will continue to be examining um proposals and understanding the implications of proposals for shoring up Social Security. Uh, we talked about long-term care a lot, and that's partly because that is something I think is very interesting and only getting more challenging. Um, we are actually in the process right now of putting together data that will allow us for each state Medicaid program around the country, so we'll have 50 different little experiments to look at, um, they all operate a little bit differently. And so it's been hard to study how different features of the Medicaid programs by state, and you we're talking about one, for example, do you pay family caregivers? Do you allow that as an option? Um, how those affect things like the caregivers and the care recipients? And does it prevent, say, extreme health events like costly hospitalizations or even delay? Does it delay entering the Person home, if we could know which of the features of these home and community-based services programs work better and are also cost-effective for the state government, then we could perhaps improve those programs. And so that's something that we've disassembled the data. It's going to be available for public use so other researchers can come in and use it themselves. And so we can have a lot of people examining these questions. But putting all this information into one place so you can compare the different state Medicaid program features and see how well they work in practice is something that's very high on our agenda right now. Yeah. So those are a couple areas we're going to be in. And then I think there's the continuing issue about how do people draw down their savings in retirement in a world where 401k plans are the main form of retirement savings for those fortunate enough to have retirement savings. And that's an ongoing discussion. Generated a lot of interest in the financial services area among insurance companies and what products people might need. And probably not everybody needs one of those products, but there are some that could help, and there's a segment of the population could benefit from finding ways to get other sources of long-term lifelong income out of their assets.

SPEAKER_01 45:19

Right, right, right. And I'm glad you use the phrase, you know, fortunate enough to have because there's a huge, um, quite a sizable percentage that Social Security is their only source of income. Uh for whatever reason, whether they didn't have access at work to retirement plans, etc. etc. So my last question to you is is there anything that you wanted to talk about that I haven't asked you?

SPEAKER_00 45:44

Uh I guess the one big thing would be, and we kind of skirted around the edges of it, and you just mentioned it, so that's why I'll answer. All right, let's do it. Which is how how do you provide broader access to retirement savings in the workplace? Um, and the reason that's necessary, like anybody could save for retirement, right? Anybody can go to a bank, they can put a savings account, won't pay them very much, but they can have an account. They could uh open an individual retirement account at a bank, or they could put money in there up to a certain limit. But people typically don't do that on their own. Um, trying to save for the long term is hard. And people need a nudge and they need it to be really simple.

SPEAKER_02 46:24

Right.

SPEAKER_00 46:25

And so what has been proven to work the best are these workplace plans where the money is deducted directly from your paycheck. Um, you can opt out. Uh, there are the ones that we tend to like are the ones that are automatically enroll you. So if you join the company, you don't have to go to the down to the HR department and fill out a form and turn it into somebody. You just have to, you just are signed up for the company, you start getting your paycheck. And unless you say, no stop, I don't want to save that 2% or 3% or 5%, um, you'll automatically be saving for retirement.

SPEAKER_02 46:58

Right.

SPEAKER_00 46:59

So those are those are the best, and so we're we've been a lot of people in the policy world and in the industry world have been looking at ways to broaden the coverage that currently exists. So right now, at any given time, in the private sector, only about one out of two people is participating in a 401k or other retirement plan. So that's a huge um that's a huge shortfall. That's a huge most of that, most of that is due to lack of coverage.

SPEAKER_02 47:26

Okay.

SPEAKER_00 47:27

The fact that they don't have access to a plan. Right. And so that access issue is something that a lot of us are really concerned with trying to solve.

SPEAKER_01 47:35

Yeah. No, that's big.

SPEAKER_00 47:36

One in two private sector workers.

SPEAKER_01 47:40

And I'm sure there's a downstream effect on how you trade, you follow that data all the way to retirement, and what percentage of those then end up having to depend solely on social security and don't have adequate savings, you know.

SPEAKER_00 47:55

Well, we we have um we have a metric which is similar to that called the net, we have something called the National Retirement Risk Index. And the index is has a very simple um measurement. Well, what is it sounds that's not it's not it's complicated in producing it, but it's not complicated to explain it. So we are looking at the percentage of current workers in the US who are not on track to maintain their standard of living in retirement. So typically, most people, a common financial goal is what do I want to be able to do when I'm retired? I want to be able to kind of continue the current lifestyle I've enjoyed while I was working. Um, and so to and so we've consistently found that somewhere between 40 and 50 percent of the population is at risk of not being able to maintain the standard of living in retirement.

SPEAKER_01 48:48

Oh, that's a big number. 40 to 50 percent. Wow. Um so no, Andy, thank you. Uh, I think this has been a very uh broad and very insightful conversation around retirement. Um, if our audience wants to see more of your work, uh uh the Center for Retirement Research, where should they go?

SPEAKER_00 49:11

Uh our website is CRR for Center for Retirement Research, CRR.bc.edu. Um the BC is for Boston College. So crr.bc.edu. Um and you'll everything we've ever published over the last 25-30 years is on that website.

SPEAKER_01 49:30

Awesome. Thank you so much for joining us today.

SPEAKER_00 49:33

Thank you, Kwame. Really appreciate it.

SPEAKER_01 49:36

Thanks. Good luck. And to our listeners, thank you for spending part of your day with us. If you found today's conversation insightful, I would encourage you to subscribe to the Retirement Navigator podcast so that you don't miss future episodes. You can also find more information on our website at benefitsinsider.co. And if you are looking for more connection, if you want to take this conversation even further, join my private community on the school platform. It's called the Next Chapter Community, where I go deeper and you get access to ask me questions and gain information and our library of resources that we have available to you for being a member. Until the next episode, I'm gonna put every link I have talked about in the description to this uh podcast episode, and I'm looking forward to seeing you on the next episode of our podcast. Thank you for joining us.