Featured Reports

Using Tax Refunds to Increase Savings and Retirement Security

Allowing households to split their refunds could make saving simpler and, thus, more likely. Since federal income tax refunds total nearly $230 billion a year (more than twice the estimated annual aggregate amount of net personal saving in the United States), even a modest increase in the proportion of refunds saved every year could bring about a significant increase in savings.

This policy brief explores the important potential of refund splitting to expand savings and discusses the obstacles and practical steps needed to make the splitting of tax refunds a reality.

The Student Debt Dilemma

When student loans are the only way to pay for college, who decides how much debt a degree is worth? This paper explores how debt aversion and conflicting views about the role of student loans affect young people, their families, and those who advise them.

Retirement Security For Latinos

Too many Americans — and too many Latinos in particular — are not saving adequately for retirement. Half of all households nearing retirement have only $10,000 or less in an employer-based 401(k)-type plan or Individual Retirement Account (IRA). Among Hispanics, the figures are even more astonishing: over half of Hispanic households aged 55 to 59 have no accumulated assets in a 401(k) or IRA. A variety of other measures confirm that Latinos are disproportionately likely to be undersaving. This report discusses ways to address this problem.

Automatic Investment: Improving 401(k) Portfolio Investment Choices

Self-direction of investments is a common feature of 401(k) plans, but it is not working as well as it could. Employees frequently fail to diversify their investments or rebalance their portfolios over time. One concern is that workers often invest too large a share of their 401(k) savings in their employer’s stock, which can prove especially costly: if the employer falls on hard times, workers stand to lose not only their jobs but also their retirement savings. But even when the plan sponsor does not collapse, poor investment choices impose unnecessary risk on workers, threaten the level and security of retirement income, and reduce the public policy benefits from 401(k) tax preferences.

The Automatic 401(k): A Simple Way to Strengthen Retirement Savings

Over the past quarter century, private pension plans in the United States have trended toward a do-it-yourself approach, in which covered workers bear more investment risk and make more of their own decisions about their retirement savings. Some workers have thrived under this more individualized approach, amassing sizable balances in 401(k)s and similar plans, which will assure them a comfortable and relatively secure retirement income.

For others, however, the 401(k) revolution has fallen short of its potential. Work, family, and other more immediate demands often distract workers from the need to save and invest for the future. A disarmingly simple concept—what we call the automatic 401(k)”—has thepotential to cut through this Gordian knot and improve retirement security for millions of workers through a set of common sense reforms.