Meir Statman is the Glenn Klimek Professor of Finance at Santa Clara University. His research focuses on behavioral finance. He attempts to understand how investors and managers make financial decisions and how these decisions are reflected in financial markets.
In this interview with Institutional Investor Journals, he discusses the recent news of a retirement crisis in the United States. He discusses that his research shows that it is really a crisis for the poor segment of the U.S. society and those at the lower end of the middle class that spend too much.
His research shows that the wealthest part of society only takes the miniuim required withdrawals (known as RMD’s) from their IRA and 401k accounts which means that they have enough money to spend without taking more from these retirement accounts.
So how can we have the segment that fits the high spenders and less savers to save more? He suggests that a idea would for employers to require mandatory savings instead of just encouraging employees to save for retirement. This would be similiar to the time when companys handled the manadatory savings for workers by creating pensions for their employees.
An interesting idea, but the savings plans offered through 401 (k) plans would have to continue on the current trend to provide better options for workers.
Click below to see the 9 minute video:
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