Transform Tomorrow E-Book

Stig Nybo

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 330

Veröffentlichungsjahr: 2013

Beschreibung

A campaign to prepare Americans for their futures Transform Tomorrow investigates why so many Americans areat risk of out-living their savings. Author Stig Nybo drawsinspiration from successful behavior change campaigns to identifythe drivers of change--context and beliefs--and how theycan be successfully employed to boost retirement savings rates.While the retirement savings industry increasingly embraces thecontextual drivers of behavior, very little is being done to shapeour beliefs to start saving smarter and sooner. Nybo suggests aretirement readiness campaign to inspire and enlist the support ofindividuals, employers, industry, government, and the media. * Explains how society can transition from treating 401(k) as avoluntary benefit to the basis upon which each individual who wantsto or needs to can retire comfortably. * Details a national, coordinated retirement readiness campaign,along the lines of successful Public ServiceAdvertisements--like "The Crying Indian" and Rosie theRiveter--that will help change behavior and re-shape theculture of our nation * Makes a call to action for such a campaign Retirement in America is endangered, but TransformTomorrow shows a path back from the brink.

Leseprobe

Contents

Cover

Title Page

Copyright

Dedication

Foreword: Alison Cooke Mintzer

Acknowledgments

Introduction

Chapter 1: Retirement Readiness: The Super Savers and the Ill-Prepared

A Comfortable Retirement

Introducing the Super Savers

Chapter 2: A Brief History of Retirement

The Rise of Retirement

Politics and the Pension

Marketing the Senior Citizen

Where is the Vision?

Chapter 3: State of the Union

Personalizing Success

The Hallmark of a Civilized Society

The Current Command Center

Advisors and Lawyers

Chapter 4: Rise of the DC Plan

Defined Benefit Plans

How Underfunding Happens

The Defined Benefit Myth

The Rise of Defined Contribution Plans

Changed Responsibilities

Longevity

The Evolution of 401(k)

Chapter 5: Financial Literacy

Defining Financial Literacy

Making Saving Stick

Chapter 6: Lessons Learned, Changing Outcomes

Disrupting Thinking

Campaign Role Models

The Power of Beliefs

Chapter 7: The Power of Context

The Context of Littering

Retirement Industry Success Metrics

Automatic Plan Features

The Power of Auto-Escalation

Qualified Default Investment Alternative

Leakage

Longevity

Chapter 8: Beliefs and Resolve

The Issue of Stakeholder Resolve

Individual Resolve

Plan Sponsor Resolve

Industry Resolve

Government Resolve

What, Then, Is Our Message?

Chapter 9: Tell me a Story

Facts aren't Everything

How Florence Nightingale Changed the Medical Profession

Business and the Creation Myth

Communicating Values

A Lesson for Retirement Readiness

A Straw Man Campaign

Chapter 10: Join the Dance

Some Honest Reflection

A Vision for Workplace Savings

Upping Our Resolve

The Dancing Man

Chapter 11: Letters to Stakeholders

Letter to all Americans

Letter to Plan Sponsors

Letter to Policymakers

Letter to the Retirement Industry

Bibliography

Glossary

List of Contributors

Index

About the Authors

Cover image: lassedesignen

Cover design: Kaylee Conrad

Cover art direction: Doug Carter

Copyright © 2013 by Transamerica Retirement Solutions Corporation. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada

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Library of Congress Cataloging-in-Publication Data:

Nybo, Stig.

Transform tomorrow : awakening the super saver in pursuit of retirement readiness/ Stig Nybo with Liz Alexander, Ph.D.

pages cm

Includes bibliographical references and index.

ISBN 978-1-118-53736-7 (hbk. : alk. paper) ; ISBN 978-1-118-57463-8 (ebk); ISBN 978-1-118-57282-5 (ebk); ISBN 978-1-118-57274-0 (ebk)

1. Retirement—United States. 2. Retirement income—United States—Planning. I. Alexander, Liz. II. Title.

HQ1063.2.U6N93 2013

306.3′80973—dc23

2012041907

This book is dedicated to my father, Gregory Peter Nybo, who passed away during the final editing of this book. Not only was he a caring father and a wise man, he was a writer, a teacher, and was the catalyst for this book. Thanks dad ; -) we miss you!

Foreword

We often hear, and use, the phrase “retire with dignity.” According to the Oxford English dictionary, dignity means “the quality or state of being worthy, honored, or esteemed.” I believe therefore that to retire with dignity is doing so with more than just the minimum needed to get by. It is doing so with a certain level of self-respect, being able to maintain the necessities, at a minimum, and hopefully able to afford a few niceties as well.

As a fellow member of the retirement industry, one who has spent much of his career learning and understanding what is—and is not—happening in the world of retirement savings, Stig Nybo believes the same thing. In these pages, he presents a call to action to encourage all to help Americans secure their retirement. Transform Tomorrow helps put clarity around the questions: what exactly do we mean by a dignified retirement, and how are we helping—and can we help—Americans get there?

Only by knowing where we have come from can we move forward. These pages provide a context of how our retirement plan, and 401(k) system, got to where it is today, and identify the misconceptions that Americans must overcome to understand how best to move forward.

For example, why is 65 the traditional retirement age, and were Americans so much better off years ago with defined benefit (traditional pension) plans? Although I grew up seeing both of my grandfathers end their careers having worked for one company most of their decades of employment—providing them with full pensions—that actually was not the experience of many. Job hopping is not a new phenomenon, and for all the talk about the “death” of pensions, in fact, Stig points out, coverage of Americans by retirement plans is actually more common now.

And yet we are faced with a dismal savings rate, longevity increases that might lead to people spending more time in retirement than they did working, and a lack of financial education and literacy.

Where will this lack of savings get us? As one adviser to retirement plans often notes in her preretiree seminars, there is a lot more cat food sold in Florida than there are cats to eat it. Now, that is a somewhat disturbing—and perhaps hyperbolic—example, but it is true that a lack of savings can mean even the most basic needs are threatened.

Therefore, as Transform Tomorrow says, we need a national initiative to change that. By recognizing this massive social issue and putting the right context around it, Stig has created a message not just for the retirement industry, but for the country as a whole.

With the close to 10 years I have spent affiliated with Asset International, the publisher of PLANSPONSOR and PLANADVISER, publications focused on helping companies and advisers provide the best retirement programs they can to employees, I firmly believe that what we do matters. Helping companies offer a retirement savings vehicle to their employees is often the only way an American will begin to think about retirement savings.

However, as the years have gone on, I have been acutely aware that the messages that we focus on are all for nothing if we don't get one message right—the need to save. As an industry, we've spent a lot of time and money trying to make Americans investors, instead of making them savers, and I do think that those of us who know better should be able to help those who don't.

As I constantly reiterate to members of my staff, I believe this is one of the largest social and public policy issues of our time. Regardless of what industry you work in and what position you hold, it is incumbent upon those of us who are aware of this issue to get behind this savings campaign initiative and do what each of us can to Transform Tomorrow.

Alison Cooke MintzerGlobal Editor-in-Chief, PLANSPONSOR,PLANADVISER, PLANSPONSOR EuropeAsset International, Inc.New York, NY

Acknowledgments

When things got tough an old friend of mine would ask me, “Stig, how do you eat an elephant?” And then, before I could answer, he would always reply to his own question with a smile, “One bite at a time.” This has always made sense to me, and it is essentially how this book was written, one bite at a time. But as they say, the real truth often runs a little deeper and is found somewhere below the surface. If asked that same question today, my answer would be a bit different; it would simply be, “Not alone.” Why? Because in my 50 years, I've never accomplished anything worthwhile without a lot of help from others. This book was no exception.

While I take full credit for the desire to write this book and for my belief that it was (and is) sorely needed, I fully share the credit for the knowledge within its covers with those who contributed so freely to its contents. Over the course of its writing we consulted with many knowledgeable and passionate individuals who opened their hearts and minds to our cause as only a 401(k) Whisperer—a term that will gain clarity as you read on—could. While their names are not mentioned here, they are listed in the final pages of this text, along with a short list of their accomplishments. I am truly grateful for their contribution, without which this book would not have been written.

But it doesn't only take knowledge to write a book, it takes a huge commitment. And while the credit for that commitment is often adorned on the author, it really belongs to all of those willing souls that get sucked into the vortex; and I'm not sure there's any other way to describe it. What's really perplexing is how utterly willing they all were (and are) to dig in and not for pay, but on their own time, on weekends and evenings. I've finally come to realize that it's just who they are as human beings. They believe deeply, as I do, in the cause of retirement readiness and are willing to put their talents to work and sacrifice time and energy to make a difference. I am humbled by their enthusiasm and their contribution, so please bear with me as I pay what little respect I can in these few pages.

I've always maintained that it takes a whole lot more talent to create, than edit (with no disrespect intended to my editors). It is with this in mind that I sincerely thank those who helped contribute to the actual writing of this book. To Patricia Advaney, Julie Quinlan, and Charlie Avallone: it was truly an unfair request to ask that you be clairvoyant enough to understand my intent and direction and write the content you actually did, and then to be subject to the violent strokes of the editing pen as the tone was refined and content changed. I am truly grateful for your time and talent.

While we've tried to tone down the technical content to the point of being tolerable for all our readers, our topic simply cannot be done justice without addressing some facts, figures, and technical jargon. A big thank-you goes to Patti Rowey and Catherine Collinson who provided research and technical support; to Heidi Cho who wrote the glossary; and to Jolene Crittenden who wrote the bibliography. To Alison Cooke Mintzer, thank you for your thoughtful words in our Foreword. And to Greg Miller-Breetz, thank you for ensuring we had our legal i's dotted and t's crossed.

To my proofreaders—Jonathan Anderson, Charlie Avallone, Catherine Collinson, Jeanne de Cervens, Jim Douglas, Pat Kendall, Monica Mitchell, Julie Quinlan and Patti Rowey—your careful work is indeed appreciated. But more importantly, your ability to deliver the message without shooting the messenger will forever be noted. As all of us who have ever written can attest, there is a little bit of our soul in every word, and I've come to believe that red is just an abusive color (at least as it relates to edits). Thank you for your kind but honest delivery.

To Amy Haley—someone who you will all have the pleasure of meeting in the text of this book because of her willingness to share—thank you for openly sharing your Super Saver ways. You are truly an inspiration to all of us who have saved too little and a glimmer of hope that we can right this ship, if not for ourselves, then for those generations yet to come. And to Mathew Frost, thank you for being an inspiration to our kids and for being willing to share your story on how you are spreading financial literacy. Oh, and thank you for being a teacher to begin with.

To Kent Callahan and Peter Kunkel, thank you from the bottom of my heart for letting me run with this project and for supporting it from day one. Thank you to Dave Shute and Barbara Muir for buying in early and staying with me throughout the ups and downs of this arduous process, and to Jason Crane and Deb Rubin, for so eloquently putting theory into practice as we take our message to the world. You are very much a part of what we have created. A very special thank you goes to Jolene Crittenden, who was the quarterback of this endeavor. Jolene, you are such a unique talent and have the ability to help others get more out of themselves than they could ever possibly get without you. As with so many things in my world, this wouldn't have happened without you.

To Liz Alexander, my co-author, it has been a wild ride, hasn't it? I'd be lying if I said I've enjoyed every minute of this journey; at times I've wondered what the heck I was thinking when I took it on. I'm pretty sure I've run the gambit of emotion, from elation to despair, and back again. But boy, has it been a worthwhile ride! You have been professional, insightful, firm, challenging, and just a joy to work with. What we produced together is far greater than anything I could have produced on my own—Thank You! Now please don't take offense, but I'm sure glad it's done.

To my dad, Greg, and to Margaret; to my mom, Tove; and to the Austin clan: my brother Dag and his family, Claudia, Mikael, Selvia, and Claudia; and to my close friends—thank you all for your support and enthusiasm. But more importantly, I'm sorry for being missing in action over the last year. Your patience with my absence has been duly noted and much appreciated. And a special callout to my coach and brother, Dag, who simply said, “What are you waiting for? Go ahead and write that book!” Unbelievably, it happened!

Finally, to my remarkable wife Holly, and my two precious boys, Andreas and Torsten: Boy, do I owe you big! During a normal year, you guys make more sacrifices than I have a right to ask for. But this last year was truly above and beyond reasonableness. I've missed events, games, and family outings, all in the name of this project. This extra duty came on top of an already rigorous schedule, and you guys have been the balancing item—you are awesome! My sincere hope is that this book will be the catalyst for people to have a different, more productive conversation about saving for retirement and that it will make a difference to society. I also hope that it sets a small example that you can do anything you put your mind to. I love you with all my heart and always remember these words we've read so many times...“And will you succeed? Yes! You will, indeed! (98 and 3/4 percent guaranteed.) KID, YOU'LL MOVE MOUNTAINS!”—Dr. Seuss.

Introduction

The crying Indian campaign, premiering on Earth Day 1971, had it all: a heart-wrenching central figure, an appeal to mythic America, and a catchy slogan.

—Orion magazine article

On January 1, 1969, President Richard M. Nixon took office as the new President of the United States of America with a promise to achieve peace with honor and withdraw a half million U.S. troops from Vietnam.

Yet two years later, the United States was still embroiled in war. At that time, protests were commonplace, with 350,000 veterans marching on Washington, DC and San Francisco, and 50,000 demonstrators setting up camp in Washington, DC's Algonquin Peace City. The free speech, free love, and peace movement was in full swing across the country. I was nine and growing up in the epicenter of controversy: Berkeley, California.

That same year, the UN's Secretary General U Thant announced that Earth Day would become an annual celebration, wishing that “...there only be peaceful and cheerful Earth Days to come for our beautiful Spaceship Earth, as it continues to spin and circle in frigid space with its warm and fragile cargo of animate life.”

The origins of Earth Day can be traced back to then-U.S. Senator Gaylord Nelson, who had pledged to focus on environmental issues in order to, as he put it, “stem the tide of environmental disaster.”

In a climate ripe for environmental activism, 1971 saw the use of DDT outlawed by the U.S. Court of Appeals; Ralph Nader formed his Earth Act group; the United States formally ceased commercial whaling; and Greenpeace was born in Vancouver, Canada. Change was in the air. Surprisingly, despite my young age, it was for me, too.

Iron Eyes Cody

We all have memories that for one reason or another are indelibly etched into our subconscious, typically only surfacing during brief periods of adult nostalgia. They are invariably linked to emotionally impactful events, like the assassination of JFK or the Challenger disaster. Although I didn't realize it at the time, one such memory was formed for me on Earth Day, 1971.

Truthfully, I don't remember much about that day; it was a long time ago. Nevertheless the following two events that occurred, neither one of them overtly sensational, somehow became a permanent part of who I am.

I don't remember whom I was with, what car I was in, or even where we were going. I don't even remember being consciously aware of what I was seeing at the time. It wasn't until later that things fell into place. We were on the Bayshore Freeway in the San Francisco Bay Area, and I was looking out the window, most likely in an effort to distract myself from feeling carsick. My eyes drifted to the mud flats of the bay and took in the debris. Half-buried tires stood upright in the mud and trash littered the wetlands. I remember an old rusting carcass of a car sitting in the mud, at what seemed like a hundred yards from the shore, and wondering how it got there. A large bird was perched on the roof, a Blue Heron, which is why I believe that this image stuck in my memory. Looking back, the strange thing was that this blight on an otherwise beautiful landscape seemed quite normal.

Later that evening, while my brother and I were watching Alias Smith and Jones on the family's black-and-white TV set, the network switched to the inevitable commercial break. A steady, almost hypnotic drumbeat captured my attention. On the screen a canoe came into view with a Native American man on board. The camera changed perspective and the Indian—having pulled his canoe onto a rocky beach strewn with debris—was now standing by the side of a busy highway, massive towers belching grey smoke in the background. The music intensified as a bag of trash, thrown from a car window, exploded at his feet. Then a deep voice said, “Some people have a deep abiding respect for the beauty that was once this country...and some people don't.” As the scene ended, the camera zoomed in on the Native American's face as a single tear rolled down his cheek.

Regardless of when you were born, you are probably familiar with the Crying Indian Public Service Announcement (PSA), which went on to become one of the top advertising campaigns of the twentieth century. The actor used in the campaign was known as Iron Eyes Cody and, although born to parents originally from Sicily, he had played Native Americans in Hollywood films for years. In 1995 Iron Eyes Cody was even honored by the American Indian community for bringing attention to and helping to promote their cause. Forty years later, a YouTube search for “Crying Indian” nets multiple versions of the original commercial with hit rates numbering hundreds of thousands each. Viewers have rated this PSA: “The best commercial ever,” “Best PSA ever made,” and “Powerful.”

As one of the initiatives launched by the nonprofit organization Keep America Beautiful, which had been founded in 1953, the Iron Eyes Cody media campaign had a profound impact on American beliefs, values, and behavior around littering. As you'll discover in a later chapter, thanks to this and other efforts, the overall litter count has been reduced by 61 percent since 1969.

There is no doubt in my mind that the emotionally charged, clear, and immediately understood message promoted by the Crying Indian, supported by legislation and community action, helped to completely transform our national landscape. Suddenly the trash I saw earlier that day, which was blighting the Bayshore Freeway, took on a different meaning. Even as a child, I distinctly remember feeling—as a consequence of seeing that TV commercial—that littering was wrong and we needed to do something to change things.

Retirement Readiness

On the surface, the issues of saving for retirement and environmental pollution may appear to have little in common. Yet today there exists a similar sense, nascent perhaps but growing, that we need to do something about retirement readiness and provoke people to save more, in the same way that we changed our perspectives about the environment and littering.

What sparked the desire to write this book was a simple but profound question: what will it take to ensure a broader, sustainable sense of retirement readiness in America? In order to answer that question, we sought the perspectives of a wide range of experts. We interviewed them at length to gather their opinions on the current workplace retirement savings system, financial literacy, our resolve to tackle this problem head on, and what might be the message we could use to rally everyone around this issue, similar to the way the Crying Indian helped to clean up the American landscape.

This was never a question I felt capable of answering on my own, despite having worked in the retirement services industry for the past two decades—first as a financial advisor and more recently as President of Pension Sales and Distribution at Transamerica Retirement Solutions. Nor is it a question I believe other industry professionals, or even policymakers, should try to address on their own. Even if we feel as if these are the fields on which the battle is being fought right now, it may not be where the war will be won or even where the best ideas will be found.

Some of the smartest organizations—ranging from the InnoCentive initiative backed by the likes of Booz Allen Hamilton, Eli Lilly, and Procter & Gamble to Google's Solve for X—are opening up challenges to seemingly insurmountable problems to people with different ways of thinking and different skill sets.

Why? Because, as the Founder of the World Innovation Institute, Naveen Jain, points out in a Forbes article subtitled “Why Non-Experts Are Better at Disruptive Innovation”: “I believe that the best ideas come from those not immersed in the details of a particular field. Experts, far too often, engage in a kind of myopic thinking. Those who are down in the weeds are likely to miss the big picture.”

Similarly, we believe the problem of retirement readiness will likely be solved by existing and new sources of creativity, with people coming together to uncover new solutions and a way forward.

Those of us involved in the effort to drive retirement readiness (for example, industry professionals, policymakers, and employers who sponsor retirement plans), may be suffering from a similar challenge: we have been so close to this issue for so long that we need to broaden our thinking in order to find true solutions, possibly including how we define the concept we call retirement. After all, as you will discover when we outline the history of retirement in the United States in Chapter 2, there has never truly been a cohesive vision around the issue of retirement; this was apparent long before there was a retirement services industry. This is a societal problem and we need to pull together as a society to fix it! Fresh minds on the issue of retirement readiness are definitely required to help build the right kind of campaign that ensures everyone who wants to or needs to can enjoy a retirement that's fully funded.

Ironically, there are plenty of national campaigns concerned with promoting health and extending our lives, like healthy eating, ending obesity, and learning to look after our hearts—but nothing focused on making sure we all have enough money in order to enjoy living those extra years. Why is that, we wanted to know? If Iron Eyes Cody could help change our culture around littering, why do we not have a similar campaign aimed at ensuring retirement readiness today?

The Crying Indian PSA was both timeless and a product of its time. From a timeless perspective (and we urge you to watch the commercial first, if you're not already aware of it), the genius was that it touched everyone individually and collectively. Even as a young boy, I felt the message that Iron Eyes Cody conveyed, with that single tear, was being directed specifically at me. At the same time, there was a feeling of solidarity—of collective responsibility—that also emanated from it. The villains were some hypothetical “them,” not us, even though collectively we were polluting the landscape. The Iron Eyes Cody spots achieved that delicate balance between galvanizing people to take action while at the same time not pointing a wagging finger at us for having caused the problem in the first place. (That's not to say there wasn't plenty of criticism aimed at the campaign, but that's an issue we'll address later in this book.)

Aside from its modern mythological quality—of tapping into universal human emotions and values—the campaign was also very much of its time. As mentioned earlier, there was considerable social unrest and a spirit of rebellion in the air; the country was experiencing a stagnating economy and America was embroiled in a highly charged war with no obvious exit strategy. The parallels between then and now are quite striking. Simply swap the Occupation of Alcatraz for Occupy Wall Street, Vietnam for Afghanistan or Iraq, and Stagflation for the Great Recession!

For any message to succeed, regardless of how powerfully it taps into our emotions or how brilliantly it is executed, the environment needs to be right. Nineteen seventy-one was obviously the right time for the Crying Indian campaign and we believe that 2013 and beyond is ripe for launching a similar message around retirement readiness and financial security.

Forty years ago we began tackling the blight of littering and pollution in this country, and while that is an ongoing battle, you just have to look outside your window and compare that to memories such as the one I described earlier to see how far we've come. Today, can we effect the same culture change with respect to how much and when we begin to plan and save for retirement?

This is not just a book but a clarion call to start a movement, whose purpose it is to provoke everyone (by which we mean the American worker, policymakers, retirement services professionals, employers, and the media) to get behind a campaign that will fundamentally change the way we view retirement readiness.

Mapping Out the Chapters

Rather than attempt to provide the right answers, we are deliberately setting out to ask what we believe to be the right questions. The conversation, in its broadest sense, hasn't really heated up yet. After all, chances are that you haven't participated in the way we are proposing!

In order to help you better understand and potentially reframe this issue, we open the first chapter by asking why human beings aren't better at making long-term decisions. If we accept that we are all getting older and one day we will no longer be willing or able to work, why is it that we don't plan earlier and better for our retirement years?

Rather than paint the typical doom-and-gloom picture, however, we also want to identify who is retirement ready, and highlight what one survey has named the Super Savers—individuals who, for one reason or another, have confidently set enough money aside to retire even earlier than the norm. We then contrast these with the vast majority of people in this country, those who are ill-prepared.

On any journey, it is vital to plot two points: where you are now and where you are headed. In some cases, it is also helpful to review the direction from which you have come. For that reason, Chapter 2 takes a backward look at the history of this notion we call retirement and its economic, political, and social implications from the beginning of the nineteenth century through to the emergence of what are called defined benefit plans. Not least, we outline that one thing we have never had, not even today, is a cohesive vision for this country around retirement readiness, a vision that both inspires and unites us.

In shaping Chapter 3, entitled State of the Union, we went back in time once more. On this occasion, we journeyed to a point when the whole of America was indeed inspired and united behind a compelling vision—that of the NASA space program, as articulated by former President John F. Kennedy. This chapter reviews the near-catastrophe that was the Apollo 13 mission and asks: What kind of command-control team do we have in place with respect to ensuring a safe touchdown for citizens during their retirement years? And what kind of system infrastructure supports the effort?

If you were to ask the average person about the pension system and how it has evolved over the past 50 years, the story would sound something like this: It used to be that we worked for one company for our entire lives and then retired with a full pension; employees were loyal and employers paternalistic. In Chapter 4, we address this misperception head-on as we investigate how the modern pension has evolved. We review the retirement plan system as well as the risks associated with managing retirement plans (both defined benefit plans and defined contribution plans) and how those risks have morphed over time.

After illustrating how the risks associated with retirement savings shifted from the employer offering a defined benefit plan to the individual, whose retirement savings now rests largely with a defined contribution plan, we also ask how prepared is the American worker for this newfound responsibility, given the current state of financial literacy in the United States? Chapter 5 focuses on the extent to which the average American is realistically equipped to make the investment decisions they are now being called upon to make with respect to their workplace savings plans. It asks: what does it mean to be “financially literate”?

Having outlined the main issues that got us where we are today, we change direction in Chapter 6 to look at what we can learn from a number of highly successful behavior change advertising campaigns, ones that might help inform how a nationally supported retirement readiness campaign could be designed. Specifically, we identify two behavior change concepts that fall along a continuum: with context on one end and beliefs on the other.

Chapter 7 further explores the first of those concepts—context. It identifies that while this does indeed drive results in terms of changing peoples' behavior (such as how more easily accessible trash cans help reduce littering), without a clear vision guiding us, the results we get are not necessarily the ones we want.

In Chapter 8 we tackle the other side of this equation—beliefs and resolve. When it comes to our self-efficacy beliefs around retirement (meaning the extent to which we believe we are personally capable of adopting new behaviors, such as saving earlier and deferring more money into plans), do Americans really have what it takes to make this change? Or, as we heard over and over from many of our interviewees, are we more of a spending culture that believes that if our consumerism were to take a back seat to savings, then we would detrimentally impact the U.S. economy? This chapter looks at our resolve to fundamentally shift course on the issue of retirement readiness from the perspectives of the individual American worker, plan sponsors (employers), the retirement services industry, and policymakers.

If we were to assume that every one of these stakeholders resolved to get behind a unifying message, what might that campaign look like? In order to help inform the creation of a straw man campaign, in Chapter 9 we investigate what it takes to craft a compelling, “sticky” message using age-old storytelling techniques. How was it, for example, that Florence Nightingale single-handedly transformed the medical profession? Why do the “founded in a garage” myths abound in high-tech start-ups? And what helped two former college sweethearts transform Uglydoll from a private gesture to a worldwide toy phenomenon?

The Final Question...For Now

Despite the best efforts of the retirement services industry, the average American is still not saving enough to retire comfortably. What we believe is needed is a nationally recognized, coordinated retirement readiness campaign along the lines of successful Public Service Announcements—like Iron Eyes Cody and Rosie the Riveter—that will help to change behavior and reshape the culture of our nation. This book began as an initial call to action for such a campaign and we could have left it there. But we didn't. In Chapter 10 we offer an invitation to participate in a coalition of stakeholders around a philosophy of “Yes, and...?” Plus, we are making significant investments of time and money in funding a web presence, as a first step toward attracting those creative thinkers who can help design a straw man campaign, as part of the movement to change the way America saves.

Whether you are an actual (or would-be) retirement plan participant, an employer with a current retirement plan or intention to initiate one, a financial advisor or other member of the retirement services community, or a policymaker—there is an open letter at the close of this book with your name on it! Each of these messages outlines the key responsibilities we feel you need to accept in order to contribute to the outcome we are seeking to bring about. Our aim with these letters is to provoke and inspire you. We need to wake up and consider the different ways in which we can commit to taking action around a goal relevant to the constituency to which we belong. But beyond that, to help build a coalition in which all constituencies come together in order to make real progress around this issue of retirement readiness. We desperately need to do that, because if we do nothing we will fail not just ourselves but our children and future generations.

There were many things told to us during the course of interviewing people for this book that were impactful and profound. One that especially resonated was this comment by Charlie Ruffel, President of Kudu Advisors and founder of PLANSPONSOR® magazine, who said:

At the end of the day, an absolute hallmark of a civilized society is for someone to be able, after decades of work, to retire with financial dignity.

My question to you, then, as you read this book is: how do we make that happen?

Stig NyboPortola Valley, CaliforniaSeptember 2012

Chapter 1

Retirement Readiness: The Super Savers and the Ill-Prepared

Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has.

—Margaret Mead, American anthropologist

It is one of those questions that psychologists and economists love (and live) to grapple with: why do we so frequently fail to act in our long-term best interests?

For example, take a common situation at the organizational level. Findings from Burson-Marsteller's 2011 Crisis Preparedness study showed that while 79 percent of business decision makers believed they were only 12 months away from a potential business crisis event, and while they recognized the risk such events posed to both revenues and reputation, just over half of the companies polled (54 percent) admitted to having a crisis preparedness plan in place. Of those who did, two-thirds agreed that it was probably inadequate.

At an individual level, we have a similar situation with respect to retirement readiness. According to The Investment Company Institute (ICI), “the average balance of Americans' 401(k) accounts was just over $60,000 at the end of 2010.” This means that aside from traditional pension plans (typically known as defined benefit (DB) plans, which only 19 percent of private sector workers participate in) and Social Security (which many Americans expect will provide lower benefits in the future), the average American currently has $60,000 to last them throughout their retirement years. According to ICI, “this low 401(k) plan balance is alarming,” but it doesn't take an expert to come to that conclusion.

The good news is that when we narrow our view to specifically look at individuals who are in their 60s and are approaching retirement and then expand our focus to include both IRAs and 401(k) balances, the picture changes substantially. According to EBRI's 2010 integrated defined contribution/IRA database, their combined balance at the end of 2010 stood at $275,517. In the spirit of full disclosure, the analysis was limited to individuals with both 401(k) and IRA balances at the end of 2010, but does demonstrate the emerging success of defined contribution (DC) plans. While this is significantly better than the previously mentioned $60,000 average 401(k) balance, there is still considerable work to be done.

Just how much savings are enough for today's soon-to-be-retired Boomers (individuals born between 1946 and 1964) is an issue we will address shortly. But think about it this way. Life expectancy has increased by almost 30 years in the last century and if retirement age remains in the mid-sixties, it could soon be the case that today's Millennials (also known as the Echo Boomers, Generation Y, or Net Generation—those people born between 1980 and 2000) will need to save enough money to cover them for as many retirement years as the number of years they were in employment. The longer they take to start saving, the harder it will be for them to make up that shortfall.

Who is promoting that message?