Transcript: Global Womens Summit: The Golden Years - Solving the Retirement Savings Crisis: Conte -

MS. KOCH: Good morning, good morning, everyone, and welcome. I’m Kathleen Koch, bestselling author and a longtime Washington correspondent.

You know, we sentimentally refer to retirement very often as the golden years, right? But is that idyllic vision? Is that really achievable based on what most of us have set aside? I mean, think about it. Be honest with yourselves, right? Well, here to walk us through that is Kortney Gibson. Kourtney is the Chief Institutional Client Officer at TIAA.

Welcome, Kourtney.

MS. GIBSON: Thank you so much. It's great to be here with you, Kathleen.

MS. KOCH: Kourtney, starting in 2031, 2031, the number of Americans over 65 by that point in time will be roughly double what it was in 2008. And we all know that's because of the Baby Boom generation, right? So, Kourtney, how are they set to live out their golden years?

MS. GIBSON: Well, we can speak in generalities today and that's what I'll do, and it depends. It depends on a number of factors: Have they saved; how much have they saved; did they participate in their workplace retirement plan? Did they have access to a pension plan or defined benefit plan? Did their workplace plan have access to lifetime income or that guaranteed paycheck in retirement?

There's a lot of factors that go into that, but you know, I want to maybe put things in context for a second. So, when we think back to 1975. That was prior to me actually being here. I'm a Millennial; I'm one of the oldest; but work with me on that. But you think back to 1975--and this is important, though--70 percent of Americans that were part of a retirement plan actually had a defined benefit.

MS. KOCH: Pensions, right, and that's changed.

MS. GIBSON: They had pensions at 70 percent. Today, Kathleen, do you know what that number is?

MS. KOCH: I have no idea.

MS. GIBSON: 12 percent.

MS. KOCH: Twelve?

MS. GIBSON: 12 percent.

MS. KOCH: What happened?

MS. GIBSON: Well, what happened was the defined contribution programs came into play. And unfortunately, with many defined contribution programs--and 401(k), and we'll touch on 403(b), which is where TIAA has been prominent and prevalent in ensuring secure retirements. But in the 401(k) market, in the default, which is where most plan participants go, where you don't actually go in and pick the stocks and bonds you want. You go in and say, we're going to go into this target date fund and I'm going to retire in 50 years. I'm going to set it and forget it.

That's generally what populations are doing today. And unfortunately, 401(k) plans don't have that guaranteed retirement paycheck in the way that, for example, that 403(b) does. So, you think about higher ed, health care, for many, many years those populations actually had annuities in the default. And what did that do? It basically served as a quasi-defined benefit plan. So, when the teachers and doctors--instead of having to worry about their retirements, they could say, you know what? I got my guaranteed paycheck. I know I can work; I can do what I want; here you go.

MS. KOCH: So, we're here, though, at the Global Women's Summit. Help us understand why this problem disproportionately impacts women and also workers of color.

MS. GIBSON: Well, it's interesting. So, I want to just finish just really quickly on the last one, because something actually happened about 20 years ago.

It was something called open architecture which came in and it actually took away the ability for many of the plans to just kind of say, with fiduciary protections, that they could have these guaranteed paychecks in the default, and even in higher ed. So, what ended up happening? 403(b) or the higher ed and health care started to look more like 401(k).

And many people don't even realize it, but they're actually offtrack for retirement. They're off track. They don't have--they think they have a guaranteed paycheck in retirement, but they don't. And disproportionately, when we go to women and African Americans, not only do we have a situation where women tend to--I think we were just talking about this. We tend to be caregivers. We tend to have children and oftentimes we might actually take some time off beyond maternity leave and leave the workforce. And what happens when you come back? You're behind.

And we already know--I mean, statistics have shown this, I'm not making this up, women make less money than men. So, not only are you now working a little bit less, you are earning less. And oh, by the way, we live longer. We live longer. So, men, on average, are about 75 years; women live to 80. So, we're living longer; we have less; we've earned less. We end up with 30 percent less in retirement; and yet, our money has to last longer. So, women are disproportionately impacted because of the wonderful contributions that we provide to society without having a monetary connection to them, generally speaking. That's my nice way of saying we don't get paid for the things we do and it's not going towards our retirement. And so, women are disproportionately impacted.

And with Blacks, it's different. And this isn't debatable. There are systemic issues that have impacted African Americans, whether it's being from political, social, economic disparities. At points in time Black people couldn't own a home. Well, the number one way that Americans actually pass on generational wealth is from what? Home ownership. You can't own a home; you can't pass it on. How do you pass on wealth? Through your homes you do--well, unfortunately, you have generations now that are first-generation homeowners, first generations passing on wealth. What does that mean? You also end up saving less. You end up saving less. African Americans, and I'll give you this statistic just for retirement for a second, 54 percent of African Americans do not have enough money to maintain their current lifestyle in retirement, 54 percent.

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That's a huge, huge number. But then, again, 55 million Americans more broadly don't even have access to a workplace retirement plan. We're at a $4 trillion retirement gap in America right now. It's a crisis. This isn't a game. It is a real-life crisis; yet, we have people that think they're doing the right thing. They're in these target date funds. They think, oh, I'm contributing to my 401(k); I'll have enough in retirement. And they're not being told it may not be enough.

And then, you have people that don't even recognize that these workplace plans, even when they have access to them, are for them.

MS. KOCH: So, what do we do about it? Now, I know that TIAA was a major advocate of a measure that Congress passed recently, and that was the SECURE Act, and that was to tackle the retirement savings crisis. But what do we need to do beyond that, because I understand that TIAA is pushing something called a retirement bill of rights.

So, what is that and how would it work?

MS. GIBSON: Well, we're not pushing it. What we're doing is we're gathering the coalition of the willing, as we like to call it. We're gathering champions, both in the public and private sector, to say, let's solve this problem.

So, I talked about the fact that, at one point, annuities were taken out of the default, right, that guaranteed paycheck that a lot of professors and health care providers--it was taken out. Why? Because we live in a pretty litigious society. And unfortunately, you know, things happened and they said, oh, we're going to change these laws. We're going to create these open-ended--what happened there, people thought they were doing the right thing, but what happened there is the protections around this were missing.

So, with the SECURE Act, you ended up getting and having the ability to say, we believe this should be a part of retirement plans. Giving people the ability to have a guaranteed paycheck in retirement should be there. And oh, by the way, we also believe that workplace providers should have auto enrollment. They should auto enroll you. Why? Because it's a lot less likely that you're going to decide, I'm going to opt out, right? Same way that you participate in Medicare and Social Security and everything else, right? You kind of figure out how to get by without it. And so, why not auto enroll people and if they really can't make ends meet, they'll take themselves out.

But we know already somewhere in the neighborhood of 90 percent of people don't take themselves out, so, why not auto enroll? And in the same way that you have the ability, when you get a raise--Kathleen, you know, when you get a raise or you get that next promotion, the same way that you're paying your current self, how do you pay your future self in retirement? That's called auto escalation. You get a 10-percent bump in your compensation today, give yourself a little bit bump for your future self and put that towards your retirement.

If there's a match at your company, a match, a lot of people are leaving free money on the table. They're not even contributing up to the match. The least you can do is contribute up to where you're going to get a match. And if you got a little bit more, put that towards it. That's how we start tackling this.

So, TIAA has created what we call a retirement bill of rights. We believe, fundamentally, that people have the ability and should have to the ability to retire with dignity, hands down. And it's not just your problem or your problem or my problem, it's society's problem at this point in time. If people don't retire with dignity, whether you like it or not, they're going to have to be taken care of at some point. So, how about we start that today? How about we get together that coalition of the willing and say, we are going to ensure that we start to tackle this today and not tomorrow.

MS. KOCH: So, how are you getting the word out about it, because--I mean, especially to young people, right, who really need to be hearing this information now, because I just--I can't imagine it's easy to get Gen Z-ers, right, Millennials excited about saving right now, and much less saving for retirement.

MS. GIBSON: You're right; you're right. But I think it's interesting, a lot of Millennials actually saw their grandparents, in some cases parents, that had pension plans.

And unfortunately, just as I talked about, they think that just even contributing a little bit which is the right thing to their 401(k), that they're going to be secure in their retirement, and they're not. That's kind of scary. But social media, the ability to kind of watch things on the news, people like you and I talking about this and making it simple and relatable helps people to understand that it's not as hard as we think. It's not as hard as we think. In the same way that we're investing today in various things, the same way that you're making sure that you're stable today, invest in that future self. That's how you make it exciting, right?

People always talk about, oh, Millennials don't think about the future--even if you use fear, right, like, Millennials have lived through two and three financial crises at this point. So, if nothing else, we actually know what it's like to think that you're going to have something and then all of a sudden it disappears in the market in 2008. I'm not talking, you know, me personally, but you may or may not have lived through that.

And so, being able to say, you know, Kourtney--I'll use me as an example--you have the ability to not only have a portfolio with stocks and bonds and diversified in the way that we've heard about in the past, but you should have this component in here that's called an annuity--nobody cares what it's called--but guaranteed retirement. This part, you will not lose. Put a little bit away that you know, at the end of the day, it's protected--protected. That gives people security and, for me, that's exciting. Security's exciting.

MS. KOCH: So, in closing, are you optimistic?

MS. GIBSON: Of course I am, Kathleen. I have four little babies. I have no choice but to be optimistic about our future.

But I'll tell you what really excites me. It is the youth. It is the children and the teenagers and the young adults today that are saying we care about tomorrow, whether it's our environment, whether it's social activities, whether it's financial implications, whether it's doing the right thing while simultaneously being able to make a profit. Who'd a thunk you could do both at the same time? I'm optimistic about that. The technological innovations, the AI, the ability to say, we're going to take what we have and make it better. And that's what we're seeing today.

So, I am. I am very optimistic. And we will solve this retirement crisis. It may not be in my lifetime, but we're going to put a nice dent in it, and TIAA is going to help lead the way.

MS. KOCH: All right. Kourtney Gibson, Chief Institutional Client Officer at TIAA. Thank you, thank you so much.

If you would like to share your thoughts, feel free to tweet #PostLive. And now stay put. My friends at The Washington Post will be right back.

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