The Tao of Chao Podcast
The Tao of Chao Podcast
Retirement Preparedness for Four Generations with Catherine Collinson
What does it take to retire well in a world where people are living longer, working differently, and facing new financial realities?
In Episode 33 of the Tao of Chao Podcast, Philip Chao welcomes Catherine Collinson, CEO and President of the Nonprofit Transamerica Institute and Transamerica Center for Retirement Studies, to explore how individuals, employers, and policymakers can collaborate to improve retirement readiness and financial wellness.
Key insights include:
- How longevity is transforming retirement expectations
- Why financial wellness is more than savings — it’s confidence and control
- The evolving role of employers in helping workers plan for the future
- Generational perspectives on saving, investing, and aging
- What we can all do to create a more secure and purposeful retirement
Tune in for data-driven insights and practical wisdom from one of the nation’s leading voices on the future of retirement.
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Philip Chao
Website: https://philipchao.us
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DISCLOSURE: Views expressed in the Tao of Chao podcasts are individual opinions and they do not represent the employers of each guest or the firm with which each guest is associated. Our podcasts are for educational and informational purposes only and should not be deemed or viewed as investment advice or recommendations. Please consult your personal financial advisor, investment expert, or investment fiduciary before taking any actions about your plan and investments.
We knew that the retirement landscape was shifting 25 years ago. I don't know that anybody knew truly how profound that shift would be. It's still critically important that not only we help educate people, but at least raise awareness among people. The importance of educating themselves. Because in the end, nobody cares more about your retirement than you and your family. Welcome to the Tao of Chao podcast, where we will try to find balance and provide a clearer path forward in this uncertain world. She champions Americans who are at risk of not achieving a financially secure retirement. She oversees all of the organization's research and outreach initiatives, including the annual Transamerica Retirement Survey in 2024, Catherine received a Lifetime Achievement Award from the Plan Sponsor Council of America for her contributions to the retirement plan industry and dedication to improvement and retirement outcomes for employees. In 2018, Catherine was recognized as an Influencer in Aging by PBS Next Avenue for her work in continuing to push beyond traditional boundaries and change our society's understanding of what it means to grow older. In 2016, she was honored with a Hero Award from the Women's Institute for a Secure Retirement. Wiser. For her tireless efforts in helping women to improve retirement security. Catherine serves on the Leadership Council of the Milken Institute Center for the Future of Aging, Executive Committee of the CIA Defined Contribution Institutional Investment Association, that advisory board of Wiser, and the Editorial Review Board of the Retirement Management Journal. Catherine earned her Bachelor of Arts degree in British and American Literature as Scripps College, Claremont, California. And here is Catherine. So, Catherine, thank you so much for taking a bit of the time out of your day to spend with me. I appreciate it. I've known you by name for a long time. This is truly the first time we're spending really, a slug of time. And I'm looking forward to it. So thank you. I know recently I was searching recently, as in, I don't know, six months ago, maybe looking at some things. And I ran into your latest survey, the 2025 survey, which is the 25th year of, of of survey for, for Transamerica. And it's voluminous and is great information is fantastic. I would do injustice to try to at all try to summarize it because it's so rich. But what I, what I would do is just to get us started outreaches a couple of sort of statistics that, that, that put some boundary maybe, to our conversation, if that's okay. So, on I will actually cite the page on 35, the fifth, 35th page. It says based on your survey, it says 2 in 3, which is 68% feel that they could work until retirement and still not safe enough to meet their needs. That is a little scary. Two thirds right? 55% are still financially recovering from Covid. I would have never known that. Fascinating that what Covid has done to the population in this country, let alone the world. 24% are very confident. I like that statistic that they will be able to fully retire within a comfortable lifestyle. But when I read that because I'm an investment professional, I always think it's the overconfidence bias that how do they know they are? You know, that confident that they do a plan that they, you know, or they just felt that they were confident? So it's interesting. 36% expect to retire at age 70 plus. There's a dash plus or do not plan to retire. I would love to spend a little time with you. The definition of retirement. Right. That's a that's a huge area. Over 53% plan to work at least part time in retirement, which goes with the prior statistics of 36%. 83% are saving for retirement in A41K or similar plan and or outside the workplace. 83%. That also means 17% are not saving at all. So that's scary. Also. Age 26 is the age or median, which is the middle, that, employed workers who are investing for retirement. Starting to save. I think statistics. And you would tell me if I'm right or wrong. Wrong. It's actually getting younger not older to start saving. So some, some of the other stuff I read, ten is the percentage median of, of their annual salary that plan participants are contributing. So they are deferring 10%. That's encouraging. We like 15, but let's do a ten. But it's better than 8 or 6. Greater than 1 in 3. Three. 37% have taken a loan, early withdrawal or other hardship, which you would probably will touch on. You know, are we looking at this as a savings account or are we looking with us for retirement? And also some secure 1.02.0. Come in and talk about other alternatives. And then finally the 82,000 is the amount saved in all household or household retirement accounts. Also a median. So all house women I one husband, wife, husband, husband, whatever. The two people together is not just one person, but they may be a one person working. But your household is a significant thing. Is not per person 82. And that seems to me a low number. So those are the statistic I'm just read off page, 35. I think we can spend five hours talking about this, which I won't, I won't, I think before we get started on any of these, there's so rich in content. I mentioned to you that I would love to know because you did something that's really interesting. You did your report in cohorts or in generations. Which is really a lovely to do because they are all not the same. So maybe I'll stop talking because I'm so excited about this topic and let you please tell us a little bit about your survey and your concept and your framework, and maybe give us some teaser and is what you found out. Okay. Well, thank you for that. And thank you for sharing all of the findings from the survey. And I will I'll back up a little bit. Thank you for acknowledging our surveys. Now on its 25th year. And of course, has grown and evolved over the years. Way back when, once upon a time, it was a telephone survey. When people still had landlines. So. Oh, wow. What what is that? And one of the survey questions was do you have internet access? Wow. So the world has changed. And right now, this iteration of the survey, which is our 25th annual survey, our overall sample population is more than 10,000 respondents. We work we engage Harris poll to conduct the survey on our behalf. Our small team does have the reach to get to to 10,000 people. And Harris Poll does a terrific job. And essentially what the goals of the survey have been over time. Once upon a time when we started doing it, we we knew that the retirement landscape was shifting 25 years ago, with defined benefit plans sort of fading at least in the private sector, and the increase and the proliferation of defined contribution plans. Of course, I don't know that anybody knew truly how profound that shift would be. But it certainly has been. And even early on, we were looking at generations. Of course, it was Gen X and boomers. Millennials hadn't entered the workforce yet. And so it's been fascinating over time to look at, now, boomers, the generation that is retiring had some still in the workforce, but retirements pretty close on the horizon. Gen X just started turning 60 this year, which is amazing. We have millennials and their peak earning years and Gen Z entering the workforce. So a lot has a lot has changed over time. And as have people's, attitudes and behaviors and awareness to save for retirement. We also lived in a time of uncertainty. People are reading the headlines. The Social Security trust funds are estimated to be depleted within ten years. There's concerns about that. Younger workers are far less likely to have a traditional pension than than the older workers, than the boomers. Things have changed. And and and the the big continuing change is increasingly, people are expected to self-fund a greater portion of the retirement income. So with the the stat that you open with, the idea that people are worried that they could work until retirement and not save enough. They're responding to that question with the mindset, knowing the expectations of having to self-fund a portion, you know, a greater portion of the retirement income. Counting on things, counting on their employer sponsored benefits. And therefore one case, people know the importance of saving. How boomers were well into their careers before having access to 401 case. And they didn't start saving till retirement. For retirement till about 35. Gen Z a very high percentage, around seven and ten or saving. And they started at age 20. So imagine that having a full extra 15 years on their savings horizon. Yes. Yes. But you've also touched on some other things. We have savings trajectories and and can and look at numbers and project forward. But our world is unpredictable. And and life happens to people and the the pandemic question asking people about the recovery from the pandemic and the news cycle moves on. The economy's moved on, but a lot of people found themselves having employment setbacks during the pandemic, either laid off or furloughed or having to step out of the workforce, because of the pandemic. And any setbacks to employment can have long term implications for people's future retirement. For sure, for sure. You know, one thing that I know, you note this very well. I just want to bring it up. Although it is to celebrate that the Gen Z are starting at age 20, which is some 15 years, but the chance of them become a centurion is greater than the boomers. So they have a longer life span to support themselves, either directly or indirectly. And so this whole notion is not only when are saving enough and regular retirement age of 65, 67, whatever age one of determined that to be regular, whatever that even mean anymore. It's that much harder for for the for for Gen Z's and the new generations behind them. If they are fortunate enough to live closer to 100. And so we kind of totally redefine thinking about what is a normal retirement age. More importantly, what is a normal retirement? What does that really mean? Right. So love to hear your thoughts on if you have any data or any discussion or conversation, either via survey or off survey, you know, what are people thinking? They know they have probably under saved, maybe they haven't under saved doesn't matter. But they are not really thinking a really, you know, a very extra long, period of time where there's no active income. Well, something that we've seen in our research for quite a number of years now, that is a disconnect from conventional ideas about retirement. For many people, work in retirement are not mutually exclusive. And and as we've looked back, oh, easily a decade, many people, especially employed workers which this is the the sample population that our survey is based off of. And our survey report, they envision a phased and flexible transition. So instead of working full time one day, oh, you know, full blast, full time one day, never again the next. People envision a a more gradual transition, either pulling back on hours, maybe responsibilities, but staying in it, or maybe doing something new and entirely different, having an on or career, maybe doing consulting, starting a business. And what I find so interesting when we compare employed workers with people who are self-employed, it really becomes clear that for employed workers, retirement is, I'll just say it. It's kind of a graduation from the rat race in the corporate rat race. Whereas for self-employed people, the idea of retirement is somewhat irrelevant. If they love what they do, why give it up? Because they reach a certain age. Yeah. Yeah. And so I think answers there. So at the end, it's really thinking about, it's not a date specific, event anymore, in the sense, in the traditional way, you know, I get my gold watch, I get my whatever, and I leave, and I never work again, per se. Back in the 50s or whatever, when the unions and all that, you know, work for 40 years, you're going to get 60% of pre-retirement income or whatever the amount of income, and you sell off to the sunset and goodbye. That that is no longer the picture. At least that's not a reality for most people. For either out of necessity or out of desire. Then I want to just do nothing and watch paint dry every day. Or is it that I still feel that I should challenge my mind? I still have the mental capacity. I don't feel like that. I am just going to be like, sit. Sit somewhere and die. Because I still have a lot of life left, and I want to contribute to my to myself and my family, to my country or to my neighborhood, whatever that may be. So I think that that is seems like more, contemporary, than than the past. It does. And when we look at people who expect to work beyond traditional retirement age and or continue work on retirement, we ask them reasons why. And it's just as often what we call healthy aging reasons as financial. And of course, having wanting the income or benefits or shoring up a savings shortfall can be really important to people. But also a num, a quite a few people. They want to keep working because they enjoy what they do. They want to stay active. Sense of purpose. Social connections. Keeping our brain alert. There are other benefits to work as well. Especially if you have a job and the kind of work that you love to do. So, let's let's just take a moment on that topic. Which are we talk about aging population. Aging population is really have two components, as you know. Well, one is we're having well, we're getting married later as a society or married at all. And if we're married, we're having fewer children later as well. So we're shifting everything forward. And at the same time, people are living longer. So, so so if you, if you add the two components together, fewer births and living longer, of course, the median age is going to keep getting older. That's not a trend just here, but trend is just about the whole world. I believe South Korea is the leading indicator, not Japan, apparently, but South Korea, who, who are growing older faster than any other country in the world. I heard China, is, at, 50% replacement rate. They're not having kids. China. So in 30 years, 40 years, they will only have half of the number of people alive or whatever. So, so so there's a significant change. With that said, do you, through your your survey or when you question, surveyors, do you get a sense that as a country, we, getting more used to older people because at one time, you know, old people, oh, fogies, you know, we only we worship the young. I mean, the Western culture has always been very much worship the young. But as fewer and fewer young and more and more old and more and more people staying. Do you see a attitudinal change in our society yet or not really yet? Oh, and how we approach it and we approach it from different angles. One is we ask survey respondents. It's a level of agreement question. I have a positive view of aging. And, and the majority of people do. It's around seven and ten, maybe even closer. Good. That's good. So, and there there's academic work. Research faculty at Yale has done extraordinary research that people who have a positive view of aging tend to age better and in better health. Yes. And those who view aging as a time of decline. Yes. So we all need to embrace our positive view of aging. May I ask you to change the word next? Next time you ask a card, do you have a positive image of the aged not aging? I'm just kidding. I'm kidding. And but if. No, this is, And it's something. Yeah. Of course, aging enthusiasts, people are enthusiastic about the topic of aging. Not necessarily aging, ourselves. Right. But, it's such a big topic of conversation. Yeah. Ageism. And we know the classic folk will call it the classic long standing stereotypes, that were just sort of re-emphasized in the media. The I've fallen and I can't get up. It's, the clapper, the clapper, a light clapper. Which actually sounds like a pretty and handy handy little gadget. Yeah. But if we look at things now, how people are living and working and even people, even through movies and television, we see a lot of intergenerational connections and, and, and pushing boundaries and people living their lives in ways that are truly inspiring. So I'm, I'm more of the mindset that people's hearts and minds about aging are changing, due to just exposure, intergenerational connections. And, and I will say, and I think a number of my contemporaries feel this way, having reached a certain age myself, feeling a sense of responsibility to age by example, you know, sort of like leading by example, aging by example and getting out and do things and, and staying active and having fun and meeting people of all ages. Yes. So the, the, the, the baby boomer generation is less last effort, to remain relevant. And I understand that I and and and and quite frankly, it's it's nothing wrong with that. And if you if the boomers are leading by example hopefully because the next generation will behind them will continue that, trend is that if, if boomers, are capable and able and willing to continue to contribute to society, either starting new business or consulting or whatever, why shouldn't they do it? Because they have the knowledge that the wisdom they have the experience and they can continue to contribute, as long as they are not there to stop the next generation rising up. And so there's always a conflict for companies to think about all that. Thoughts on that? Oh, I do, thank you. Yeah. Do you have you pressed a button? Actually, there's two sets of thoughts. One on the topic of potential ageism in the workplace. And, the need for what we like to call age friendly employers because, you know, people are living longer, needing to work longer. So the numbers add up. And to help self-fund that retirement. But in our research of retirees, the median age they retired is 62. They're not making it to 65 all too often to either due to personal health issues or employment related issues. If you're an older worker, say, age 50 plus every year that you get older, if you need to go find a job, it's going to get harder and harder to get your resume through the the online firewalls and onto a hiring managers desk. And there are there is a vast talent pool out there of people who are ready, willing and able to work with education, experience, expertise, maybe some some new training and transferable skills, to be focused on. But by and large, employers, even amid labor shortages, employers have been it seems like missing out on this talent pool and the recruiting efforts. The second thing, so that's one thing, is we need age friendly employers as our population ages and fewer young people. Our economy depends on the, on on a vibrant workforce. And, to be able to include older individuals, as long as they want, need to work and are able to work. Age. It shouldn't matter. Then then there's the other perception that I've heard. And I've heard mumblings. Yeah. This is if you want to really start a, a raucous conversation, the perceptions, older workers are taking jobs and promotion opportunities for for people to move up. And I don't know that there's any academic literature that supports it. An inclusive economy is a productive economy. Yeah. And maybe within certain organizations where there's long tenured employees and the organization isn't growing. And so the dynamic isn't there yet. But then there's also a lot of really fast growing companies out there, start ups of right now, we're in the middle of a technological revolution that I don't think anybody fully comprehend how huge it's going to be. And that's the that's the kind of environment where people of all ages, young and old, if you raise your hand and can figure it out, you're moving up. That's fantastic. I was just thinking. Almost no conversation goes by every, any day without bringing up the two letters a and I. So, so how do you feel? I mean, I could make a case that I will if we're going to. If I get to a place where we're really replacing meaningful number of workers. Is it more likely to replace the, the, the experienced worker or the less experienced worker? In other words, is there advantage actually, that you are older, that the the wisdom and the experience are not so easily available through an AI? Whereas younger worker, I'm just making it up as I go here. That the entry positions and so on, where is really doing mundane work that I perhaps can can handle. And so there's actually if, if my thesis is even close to true or accurate, then the, the, the truly, older folks who have done this and have the experience, have the wisdom, have the acumen to, to to do their job is, probably less likely replaced because I can't I assuming competing with I am talking about that AI is less likely to be able to, replace that set of skills vis-a-vis the other set of skills. What's your what's your thought on? I don't know, I've never heard people talk about it, but I'm just wondering, have you do you have any thoughts? And I have some personal opinions and, based on my own life experience. So for whatever they're worth. And also become a student of the topic because I'm fascinated by it. But jobs may be impacted. How might they be impacted? How potential productivity gains that could be made. And and it and looking at it because there's so many unknowns. It actually takes me back early in my career. My my first, my post-college work. Yeah, it started out in it. That was my, Wow. Actually, I was an English lit major in college. Yeah. And it was the 80s. And I got in a pickle one semester. I had to write 17 papers on my electric typewriter. And I said to myself, there's got to be a better way. And I learned about this thing called a PC, and that became I spent my entire winter break learning how to use the PC because it's going to make it. Make it easier for for me to write my papers. And it did, by the way. And it also propelled me to get a job in the computer lab at school. And then, when I graduated, I had a a unique skill set because he knew how to use PCs. And I went into the corporate environment and there was a lot of fear. Also, there was the migration from, like, old mainframe to online, you know, the computing power had changed. And then ten years later, the internet's coming along. And what makes technology successful is how. Well, business and I'm talking in business environment, how well businesses can integrate them into their operations. And there was one chapter of my career, one of the most I would call, one of the most memorable, where I was on a team. And we were kind of the cleanup crew because technology had been implemented, but the surrounding business processes had not. And it yielded some odd results that required some attention. And where we're at today, the success of generative AI and all of the different flavors of AI is really going to depend on the vision of people who use them, implement them, and integrate them into their operations. Yes. In a meaningful way, and with a whole new set of boundary guardrails and controls. Yeah. Yeah. We also know that, you know, we live in a very dynamic environment where guardrails and controls are becoming more important than ever. Yes. So in terms of whose jobs might be affected, I think we all need to look in the mirror. But I see so much value of for people of all ages. Older individuals have life experience. I use the word B.S. detector. You know, generative AI is known to produce hallucinations or inaccurate output. And I think people with more life experience and expertise in their field will much more easily in a much better position to detect it and question it than people who don't have that level of life experience. You. Yeah. Yeah. On the other hand, it it's all hands on deck figuring out how to how to work with it, how to use it. And it's all critical for younger people and people of all ages, to still be masters of their skills and their expertise. The real productivity gains that are going to come out of AI are the abilities and expertise of people to fully unleash its potential, to know how to write the prompts, to get it to do exactly what they want it to do the imagination, the creation, the innovation. A tool isn't going to innovate for you. It is a tool that can help you innovate and collaborate with others. That's that's my view. And I can also productivity gains. When you think about, like call centers listening in on call centers, trying to figure out what service issues are and what, trends or blips or things that are coming up, who has time to listen to thousands of hours of recordings, whereas the technology can do it far faster and spot the trends and pinpoint, you know, highlight the the good things and the pain points. A lot, a lot there and write a lot of changes. And, the final chapter obviously not written. I mean, we're I think we're probably a chapter one, quite frankly, because because like your point is application, we haven't quite got to the application, which is really where changes are significant. We just doing the invention stage. So five years from now we'll talk again at least once. Yeah. Yeah, that was it. Well, what happened the last five years? How did you. You know, I think this change it, but but changes at a more rapid pace. Because the the the computing power and all that is, is doubling quickly. Let's turn to a, you know, some of the statistics that I read about, saving for retirement, which we understand is under say for most people have felt that they have under safe. But during your conversation with them or during Harris poll, do you find out? Oh, gosh. You know, you're under safe. Why do you under safe? When you know what you haven't done right? What are you doing about it? And what do they say? We just don't make enough money. There's too many other things tugging at our current need. Or can you enlighten us a little bit about if you have answers to it? Just curious. Okay. So, it my take on it with, people and people who are employed in the workforce. Baby boomers got a late start for one case. Weren't available yet. They they were already mid-career before they had the opportunity to say Gen X, I lose sleep over. I lose so much sleep over Gen X. And and in some ways I would call this sort of societal sequence risk in that as they were entering the workforce, there were still fairly widespread assumptions about paternalistic employers, traditional pensions, and that didn't really materialize for one case came along. And employers, we know the adoption rates were still working on that. So if you're a Gen Xer in your 20s and lucky enough to work for an employer that offered a 401 K plan, it was highly probable you might not have been aware how truly critical that was going to be to your future retirement. That messaging didn't exist because people didn't know. And some Gen Xers got a strong an early start, but others got a later start due to lack of access and lack of awareness. And that is no fault of their own. Yeah. Millennials and Gen Z, are far more, aware of it, and they've started saving at an earlier age. One of the other things, though, that is challenging eeoc's it, in my view of the world, is the single greatest ingredient to achieving a secure retirement is access to meaningful employment with retirement benefits throughout your working years. And we've had some our economy. We've seen, you know, we've seen a lot of growth. But then we've also seen volatility that hadn't been seen in since the Great Depression. So people coming you know, getting started. We had the.com boom the.com bust. Then we had the what many people refer to as the Great Recession. People got overextended. Some lost their homes. And all the way to 2019, we were asking people about their recovery from the Great Recession, which technically ended in 2009, and fewer than half said that they were fully recovered or had, not been impacted. Then the pandemic comes along. And so what's happening is with people on their savings journeys, they're working hard, they're saving, they have setbacks. And when we you touched on the the survey finding about people tapping into their savings. Yes. Before retirement. When we look at the reasons. By and large, it's like, it's the, desperate measures or it's urgent situations. People are not frivolously using their four months as an ATM. There's compelling reasons why they find themselves doing so. And then another point. Because I'm on a roll now, is that I find so intriguing and and fascinating is often we think about an employee and this is an industry. This is what I grew up with in the industry. We think about people's savings as an individual. And here's your savings vault, your participating. This is your contribution. Got your asset allocation or your investment options. And think of it, you know, as a single person or as a married person family without fully understanding family, how broader family influences people's savings and and even tapping into savings. So one of the things that we've seen is in, in reading verbatim responses by people took a loan or early withdrawal. Yeah. Ofttimes it was for a family member in distress. It could have been a parent. It could have been a sibling. Somebody in the family had a terrible car accident. It wasn't necessarily for their own situation. People are part of families. Families support each other. And the couple of really big things that we see going on, the prevalence of caregiving is intensifying. Right now. It's about 4 in 10 workers are currently serving or have served as a caregiver. And among them, at least 8 in 10 have made some sort of adjustment to their employment and could be reducing hours using days. Some have gone to the extreme of quitting a job altogether. But these, you know, caregiving out of love, can have implications for their own employment, their own future. Promote ability, earning power, and ability to save for their own retirement. And then I'll leave you with one more astonishing data point about Gen Z. And I think they, you know, just doing the math kind of the, the children of Gen X and Gen X is Gen X is squeezed right now. They they societal sequence risk, around 1 in 5 Gen Z workers cite supporting their parents as a career financial priority. Wow. That's amazing. So in the context, a plan sponsor and advisors, as they're working with individuals who could be employees through a plan or on their own to really understand, get, you know, and serving your customer, understanding what their overall circumstances are and not make assumptions that they're just worried about themselves and the their spouse, that there's broader circumstances that could be at play. So would you say that overall, Americans are basically not saving enough regardless for retirement or not because there is not enough, you know, saving for emergency sounds like, because they are, asking other family members to chip in for them, which is the point that you made that they borrowed, you know, this Gen Z borrowed, actually, to help a family member because the family member didn't save enough, or they may have saved enough, but they fall into hard times. I mean, whatever, whatever the reasons are. So at the end of the day, it appears that the job one is to start saving more, than whatever you are doing, because of terrorists, because there are risks that just came out of nowhere that we didn't think about. We didn't realize, but we love our family, or we feel responsible and we're willing to go and almost harm our own financial situation just to help. And I totally understand that. But it's still a savings problem. That we're one of the richest countries in the world, or one of the highest living standards. Let's not say the richest. We have one of the highest living standards in the world. But it seems like saving is not one of the highest at all. Not even close. I know, secure is at one point. Oh, that talked about, having second savings account in 41K plan. Knowing that there is leakage from borrowing. So maybe we should help them through payroll deduction to do that. We also burdened the retirement plan with, student loan reduction and how how the employer can also help to, to minimize the repayment responsibility. We're looking for this retirement plan to do just about everything except maybe cleaning your windows. You know, in the over the weekend or something. If we're not already. Not saving enough for retirement. Assuming that's not even assuming it's clear we're not saving enough for it. I mean, on average, I'm not talking about everyone, but on average, what's the likelihood of us number one saving more or and or what's the likelihood of us saving on the side had nothing to do with retirement but emergency, and helping family or whatever that may be. What's your what's your thinking about that? And, you know, my greatest influence, my greatest financial influence was my grandparents, who lived through the Great Depression and and how were they? It was always live within or beneath your means, because there's going to be a rainy day that comes along, and you're going to need that. That's the savings. And and also proponents of saving for the future, saving for a time that you won't be working and you'll need you'll need income above and beyond Social Security. That's one of the things that was so different about their generation was the lack of access to credit. No. If you couldn't afford dinner, you went hungry that night. You didn't put it on a a credit card. Yes. Or or a buy now, pay later card. And so our money mindset and how we manage our money, I think is something that we all need to reconnect with. And debt is it's so easy to spiral out of control and to be able to. And I know I'm singing to the choir. Financial literacy in schools is kids are growing up really learning how to manage their money and make the most of the money. Their money is just absolutely critical and it will help them avoid missteps that can be difficult holes to dig out of. We have a new threat in existence now, though, you know. Yeah. And when I. Well, I'll go back to the credit card debt when I went to college. You know, my parents thought I needed to have a credit card because I got in a pickle. That meant I had to go to the bank with my mom and sit with the banker. And the banker had to give me a lecture about really being responsible. And and the only purposes that this card could be used. And then my mom had to cosign it. And then, you know, amicably, it was a family conversation about responsibility. Yeah. Now kids get applications in the mail or sign up when you sign up for school. You know, you walk on campus and there's access, a new threat. Now there's all the online betting and and gambling. Yes. Which just, makes it so easy for people to engage and lose money. And it's, it's really scary. It can. It can be people's unraveling. And and you can't. And and avoid. Lots of temptations out there. So I think the, the issue remains, unresolved about a time when we realize how unresolvable it is. It's already too late. Are you a believer in default? You know, we're going to default you into a retirement savings vehicle. We're going to default you starting at 6% and go up typically 1% a year and to 15. So auto escalation, you know, auto enrollment and put you in, some kind of shiia. Are you a big, strong believer of that in this case? I am and I am in the context of I'm a huge believer and making it is convenient is possible for people to save and invest and removing obstacles that make it inconvenient. Yeah. And and the auto enrollment, the auto escalation, you know, back in the day, in the 80s and the late 80s, when I had first access to a 400 and K, I had to wait a year. There's the my employer had a year long eligibility, and then I had to fill out all of these forms and and mail them in. And it was a hassle. I was going to get that match no matter what. But, I had coworkers that they just it was it was too easy to procrastinate. And we know what happens. Time flies. It's easy for us. Time to get away from you. So the defaults and the nudges that make it more convenient to save, are are really super helpful. And the the, all the innovation that's taking place on the investing side. Yes. For people to have access to the professional guidance and expertise and, and various types of services that are available, can only help optimize their decision making. And and a very good thing that said. It's still critically important that not only we help educate people, but at least raise awareness among people. The importance of educating themselves that you've got to learn enough to ask good questions so you can make informed decisions. Because in the end, nobody cares more about your retirement than you and your family. Yeah. Yeah. So let's turn to sort of the way that we have been thinking about retirement savings. We went from a defined benefit plan, which you mentioned at the top of our discussion. And now we don't have a defined benefit plan where we know how much we're going to get and we can never outlive it. And for the rest of our lives, that regime has gone and understandably gone. It's just not affordable, frankly. Simply relying on your employer and retiring at age 62. Then back in the day when we're living to 85, 90, 90 plus, I think Robert Redford just died suddenly or around 90 years old. I still remember when when he did the movie with Barbra Streisand. It seems like yesterday, but it's, of course, a long time ago. But anyways, so the question, the question is, how do we how do we think about we have done a reasonably good job. Now that we have 41K that, we are making it a self-directed, account based, individual account based retirement plan. And we try to educate people. We do seminars, we do financial wellness, you know, all the stuff that goes on in the industry. We did a okay job in helping people to accumulate, but it seems like we're still turning the ship into focus, starting to focus more on the accumulation or retirement distribution phase. Much of your, survey on that topic yet, in terms of the attitude towards the towards that, in terms of plan design, longevity risk, everybody knows, you know, I'm always worried about am I going to outlive my income knowing and doing something I totally different. Right. There's this fear and then the insecurity. You have to live with the fear. Insecurity. But I'm not so sure everybody understand all the different combinations or methodologies that 1st May contemplate. And how much of those are really, should be made available through retirement plan to at least have an opportunity, an option to do something, whatever that may be. Any thoughts on that or any survey results from that? Yeah, I for both. Yeah. Okay. And and retirement income strategies and drawdown strategies, especially in the context of the plan. Of a plan, for, at least as long as I can remember. It's almost like the quest for the Holy Grail. Yeah, yeah, I figured. This. Out exactly. Yeah. And it's so difficult. Yeah. For a plan sponsor, of course, there's concerns about potential fiduciary, liability all the way, you know, not just during employment, but all the way through somebody's retirement, which is, you know, not. Yeah, yeah, it's real. I think that the concerns are understandable, to open up conversations and every the other thing is, there's no one size fits all approach, because by the time somebody is ready to retire, they have a unique financial situation. You know, people who are just drained, the workforce or their balance sheet is probably zero and zero. And they're just get it, hopefully. Well, if that student had, different set of circumstances, but by the time somebody retires, employers and plan sponsors, they don't know that individual's total financial situation with their spouses situation, health circumstances, homeownership, kids, parents. It's there's just it's so, so personal to every individual. The if there was to be a rule of thumb, the rule of thumb is make, professional advice counseling services available for people who don't already have an advisor, or even if you do, it's a second opinion to help figure out what strategies are going to work best for them. So you think basically more help, more hand-holding, to walk through at least the planning stage, early enough? Of course not. The day before you retire to to seek advice. It's a little late. Yes. And and that's another also is people have maybe milestone birthday. So it's a 50, 55, 60 to have a financial plan. And one of the things that I consider all critical and I don't know that, we're that good at doing that yet, is somebody has an assumption I'm going to retire at 65 or I'm going to retire at 67. Yeah. All our research tells us almost 6 in 10 retirees say they retired sooner than planned. And so two, to really factor that into the plan that maybe six. Yeah, we'll pick 65 is somebody's base case scenario. Also have a plan if retirement comes at 61 or at 62. Because statistically, it's a distinct possibility that it might happen that way, and have contingency plans. So when you think about we earlier talked about how, how we define retirement, and we had a really broad conversation, regarding the realities that many after they retire, they really not retired in the 1945, 55 idea, but really starting to sort of I'm leaving the full time employment of a career and do something else. It could be related. It could be not related. So, so, do you find that the 62 year old or the ones who retire is out of, you know, health reason? They have to retire, they can't do anymore or they're just so sick of what, you know, I think you mentioned earlier the rat race. They don't want to deal with that anymore. They want more psychological calmness or less stress, but they are still very vibrant. They still want to do something, either out of necessity or out of desire. So do you see that those two really working in concert with each other, or do you see them as in conflict with each other in terms of early retirement? And really, oh, I didn't save enough or early retirement. It's really retirement from a traditional career, but it's really not early retirement, but it's just moving on to the next final phase of their slowing down. Go into part time and moving into consulting and maybe a small business, and then eventually retire. Is that do you see those two in some continuum? I and I see them actually as complementary concepts. Okay. And what it is, it's it's also an invitation for, you know, age 50 plus career planning, often career planning, you hear for people in their 20s and 30s. Right. But you don't hear about it for people in their 50s or 60s. But to understand what your skills are and what possible avenues might look like, and a classic example of somebody who's in a physically demanding job, and they're, they're still a lot of those really super physically demanding jobs out there that they're great, but reach a certain age they can't do anymore. Yeah. But the that it's just doesn't yeah. It doesn't work. So if you're in one of those types of jobs to start thinking about what your next chapter might be and exploring that what the skills and experience and credentials certifications are required that could help you find opportunities in that regard. Also for for people who are looking for a next chapter, start talking to people find and this is my tip is and this also relates to mentors. And this goes back to my Grimm and to my grandmother. One of the things that was so amazing about her when she turned 90 and she was talking all about her friend Emma, who was her mentor, and if she's like, oh, Emma's my my mentor in old age, she turned 100 this year. I mean. And yeah, and again, it's how we think about things when it's when you have a friend or you know, somebody and they they've figured it out or it's working for them. People love to talk about themselves, you know, go learn the secrets to their success. And help imagine what your future might look like. I think you are a very hopeful person that just spending time with you, you're very positive. So after all these surveys, are you hopeful? And why are you hopeful? Yes, I am a hopeful person. I'm hopeful. I'm optimistic. If I weren't, I wouldn't have a reason to get out of bed in the morning. But I believe in people, and I believe. And we we. Yeah, we live in interesting times. Maybe a little bit too interesting, but there's there's so many discoveries to be made and ways for people to engage and connect in new and different ways. Things that we're learning about ourselves, things that we're learning about the aging process, how people live, how people work. The world is just a really exciting place for me. You know, and for that, how if we're all fortunate enough, how is each day passes, we all get a day older and nobody's figured out how to bend time yet. Maybe that'll happen in our lifetime, that we can become time travelers or reverse the aging process. But right now, as each day passes, we all get a a day older. And, we have all have opportunities, to achieve a secure retirement or at least better outcomes. That's that's wonderful. I can go on, but I think we, probably top of the hour and then some. It's been a fascinating to learn about. First of all, learn about the journey. Second of all, learn about what is currently happening, and learn that there are ways to still there's never a, dead end road, that there are ways that we can still, take matter to our own hands and do something about, and it is, it is, you know, using using the old saying it takes a village to make it happen because it's different components. But I think number one is being aware, number one, being reflective about where you are, where you want to go. Map out a way to make sure you understand what it takes to get there. Because it doesn't happen by chance, doesn't happen by luck. It happened because of you. Have a plan. And the better the plan is, the more likely you're going to be in a good place, shall we say? Is that a fair sort of thinking about what your survey says or want you to say? Yeah, yeah. And even getting good at planning itself, because we know life has curveballs. There's sometimes there's good, there's amazing surprises and then there's setbacks. But to be, you know, very capable of planning and pivoting because pivot became our pandemic word to be able to adjust a lot and do course corrections along the way. Kind of opened up possibilities that we would have never imagined otherwise. I think having agility, mental agility is a is an important ingredient to survival and, and prosperity. You know, don't be stuck in a frame because that frame may be right at the time that you started in May. The frame is totally different. Yeah, yeah. But do we need to? So. Very good. Well, Catherine, thank you so much for sharing. I mean, that beats me reading the, you know, 103 pages, whatever it was. Because it's not that you have not that that somebody didn't inform me, but really, giving the kind of connecting to you and your overall understanding through, through, through your study is really helpful. And I hope that people who are listening, we have compel them to start looking at their situation and make reasonable assumptions, not to be overconfident, put a plan together and take action. Yeah, I think that's a hopefully we get some part of that, a lot of it for the audience who's listening. So thank you so much. I know I'm going to be seeing you in, month, less than a month. Well know, a little bit of a month time. And, looking forward to continue this conversation. Very good. Well, thank you so much for having me on your podcast. And I we've talked about this report a lot. Can I tell people where to find it if they want to read it? Please tell. Everybody. You can find our report, on our website at Transamerica Institute, dawg. And, we're publishing new research about every 6 to 8 weeks. So we we hope you'll you'll visit us and that you'll visit us often. We have a LinkedIn page to follow us. We need. I will be one of the followers, so thank you. Thank you for that. Thank goodness you mentioned it because I, I took it just naturally, I thought everybody has it, but not yet. I understand. So thank you very much. Again, Catherine and I looking forward to spending time again with you. Thank you. This was, really enjoyed our conversation. Thank you. Thank you very much. You can always find more episodes by visiting Philipchao.us/podcasts, or find us on your favorite podcast app. You can always leave us feedback, ask, question, or request a topic for us to discuss by sending an email to pc@philipchao.us Views expressed in the Tao of Chao podcast are individual opinions, and they do not represent the employees of each guest or the firm. Each guest is associated. Our podcasts are for educational and informational purposes only, and should not be deemed or viewed as investment advice or recommendations. Please consult your personal financial advisor, investment expert or investment fiduciary before taking any actions about your plan and investments.
