Boston College: Center For Retirement Research By: Diana PowellESQ.

While retirement is the responsibility of every American, current research shows the typical American is not properly prepared to retire. However, with modest changes to behavior the retirement problem can move towards a resolution. Boston College’s Center for Retirement Research works to do just that.
The Center for Retirement Research at Boston College (CRR) was established in 1998, along with two other centers: the National Bureau of Economic Research and the Michigan Retirement Research Center. Together, they make up the Retirement Research Consortium (RRC), made possible through cooperative agreements and a grant from the Social Security Administration. 

The CRR has become a first-class research facility under the leadership of Alicia H. Munnell, the Peter F. Drucker Professor of Management Sciences at Boston College Carroll School of Management. Currently, the CRR has a staff of 22 full-time employees and 5 to 10 part-time student research assistants. The college’s mission, according to their website, is to forge a strong link between the academic community and decision-makers in the public and private sectors around the critical importance of the nation’s future.

Historically, the main areas of research for the CRR are Social Security, State and Local Pensions, Health/Long-term Care, Financing Retirement and Older Workers. “We define our purview very broadly, in that even though we are in a specific topic about retirement income security we are really interested in anything that could potentially affect money and retirement. So that gets us into studying a lot different areas, not just what’s going on with Social Security and what’s going on with private and public pensions,” stated Andrew Eschtruth, the center’s Associate Director for External Relations.

As noted, Social Security is a particularly important research area. “Social Security of course is always prominent given that it has such broad coverage of the U.S. population and that it’s the backbone of retirement security for pretty much everybody, even people with upper middle class incomes,” said Eschtruth.
According to Eschtruth, research with older workers emerged naturally because the researchers began to worry the combination of Social Security and pension funds would not be enough to comfortably live on in retirement. 

After the financial crisis of 2008, the CRR focus is on state and local pension plan funding. Also, the shift away from defined benefits towards defined contribution plans is an area of increased focus for the researchers at the CRR. “[The 2008 Financial Crisis] laid bare some of the problems and challenges of the system, in a way that was less visible before the recession and financial crisis,” explained Eschtruth. “It really accelerated some of the vulnerabilities of the system that we thought would take longer to fully develop or fully become visible.”

The CRR’s study of 401(k) plans noted the ongoing shift from defined benefit plans to defined contribution plans. Their study measured contributions to the plans, and projected out the number of years until retirement, to determine if participants could in fact have enough to live on without sacrificing their present standard of living. The 2008 crisis meant the retirement savings, which were already too small, got even smaller—this exacerbated the retirement savings issue in America.

In order to measure retirement preparedness, the CRR created a tool called the National Retirement Risk Index. Every three years a different sample of people is taken from the Federal Reserve’s Survey of Consumer Finances (which represents a national sample of households) and a projection is made to determine what their incomes will be in the future when they are of retirement age. A comparison is made between the target benchmark and their projected future income to determine how many people have fallen short. 

Eschtruth explained this index was developed to specifically spotlight retirement security and how the nation is fairing over time. “It’s a way of taking the temperature of individuals and how well people in general were preparing for retirement over time.” The goal and focus of this index is to see if people maintain the same living standard in retirement as when they were working.

The findings of the Center’s National Retirement Risk Index are startling: they have seen the index rise in a period from 2007 to 2010 by 9%; the percentage of households falling short went from 44% up to 53%. This represents the biggest rise in the shortest amount of time since these kinds of records were kept, becoming a huge concern for researchers. They are working on finding real solutions which real workers can use to meet the financial challenges which lay ahead for retirees.

One of the ways in which the CRR is working to resolve these challenges is by improving and expanding financial education and literacy of workers within the next four years. 

“We like financial education, but we like it harnessed specifically to the service of better decision making,” Eschtruth explains. “If providing people with certain information can be packaged in a way that leads to better decisions, then it’s effective. We are less concerned with people just knowing more information.”
While the CRR does not directly lobby, they do provide research on many public policy issues to help educate decision- makers. According to Eschtruth, “[The CRR has] directly contributed to some specific reforms passed at both the federal and state levels.” 

The CRR will continue its goal of summating information to its key elements, stripped of extraneous detail, to provide clarity and better outcomes. 
For More Information On Boston College’s Center For Retirement Studies, Visit:

Be sure to take a look at Squared Away, the CRR’s new financial education website (currently in a beta version) which provides trustworthy tools and information to help consumers make smart financial decisions.

Diana K. Powell

Diana K. Powell, Esq. joined Westminster Consulting in September 2012 as Senior Legal Advisor. Previously she was a sole practitioner who advised educational organizations, government bodies and private corporations. Diana was responsible for negotiating agreements for high-tech software corporations...

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