Products February 19, 2016

LPL Guidance Offered to OneAmerica Retirement Plan Participants

OneAmerica has made available to plan sponsor clients Worksite Financial Solutions’ Employee Transition and Engagement Solutions.
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OneAmerica plan sponsor clients will now be able to take advantage of LPL Financial’s Worksite Financial Solutions platform.

The company has made available to plan sponsor clients Worksite Financial Solutions’ Employee Transition and Engagement Solutions, which was created to support employees during times of transition, including when they join a plan and upon employment separation.

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“Job change is a reality of today’s business climate, and LPL’s platform was created to address the needs of clients from the beginning so they can confidently focus on their financial futures regardless of who employs them,” says Tammy Ouverson, vice president of National Accounts for OneAmerica. “As a company that provides comprehensive retirement products and services, we believe that it is our responsibility to make sure our clients and participants have the best tools at their fingertips to help them get to retirement and beyond.”

Worksite Financial Solutions offers plan participants education about their options through different life stages, including plan enrollment guidance and various financial education tools. LPL launched a mobile app in 2014, and last July it established a relationship with Ramsey Solutions to offer the SmartDollar financial wellness program to LPL retirement plan advisers and plan sponsors.
Data & Research February 19, 2016

How Market Shocks Affect Decisions to Retire

Researchers conclude the number of workers who experience substantial wealth shocks is relatively small, so the magnitude of the aggregate retirement response is likely modest.
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No doubt those close to retirement age are feeling rattled by the recent stock market fluctuations. One might think they would delay retirement until the market improved.

However, two professors of economics at Wellesley College investigated the effect of stock market fluctuations on retirement decisions in the United States using data during the 2008-2009 recession and the dot-com crash of 2000–2002, and found short-term market dives do not generally slow retirements.

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According to the researchers, overall, nearly six in 10 near-retirement-age households have less than $25,000 in stock assets and only one in eight have assets over $250,000.

Asset ownership and values are strongly correlated with education, so the researchers theorized that if workers respond to financial wealth shocks, the stark differences in stock ownership by education suggest that the impact of stock market returns on retirement will vary by education. They investigated whether college graduates between the ages of 55 and 70 are more sensitive to short-term (single year) stock market fluctuations when making retirement decisions than less educated individuals.

Data from the Current Population Survey, 1980–2002, and the Health and Retirement Study, 1992–2002, showed no evidence of this. The researchers reason this could be due to the small number of individuals who experienced large, unexpected wealth gains or losses during this period, or to the wealth effect being relatively small.

When the researchers revisited this question with more years of data, they found long-term market fluctuations, as measured by the percent change in the S&P 500 Index over a five- or 10-year period, affected the retirement decisions of college-educated workers ages 62 to 69—a one-standard-deviation (77 percentage point) increase in the 10-year return increases the retirement rate of college graduates by 1.5 points, or 12% relative to the mean. But, they found no statistically significant effect of short-term fluctuations on retirement behavior, nor any effect of market fluctuations on younger workers or workers with less education. 

The researchers conclude that while there are workers whose retirements are slowed or accelerated when they experience unexpected changes in stock market returns, the number of workers who experience substantial wealth shocks is relatively small and the magnitude of the aggregate retirement response is likely modest.

The research report is on the National Bureau of Economic Research’s website.

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