The Social Factors of Retirement Savings

Research & Innovation

The Social Factors of Retirement Savings

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Stevens School of Business Industry Professor and Associate Dean of Undergraduate Studies Joelle Saad-Lessler is working hard to help people navigate their financial landscape when they stop working.

Her research is focused on the economics of retirement. Her latest report, published by the National Institute on Retirement Security (NIRS), evaluates the retirement readiness of Gen X, the forgotten generation, and finds them woefully unprepared for the next phase of their lives once they stop working. The typical worker in this cohort has only $10,000 saved for retirement when they should have close to ten times their annual income put aside by the time they retire.

Many members of Gen Z also identify as the sandwich generation, where they find themselves taking care of elderly parents and their kids in college, which adds another barrier to their ability to save for retirement. This finding directly links to Dr. Saad-Lessler's related work, where she delves into the roles of family and friends in financing retirement and the increasing shift in cultural attitudes in the U.S. from individualism to collectivism. The shift has come 40 years after the defined pension structure of retirement savings transitioned to a more employee-based 401K-like system that moved the investment risk from the employer to the employee.

"I've been focusing on retirement, and different facets of retirement for a long time," she said. "Are people ready for retirement? Have they saved enough to be able to live after they stop working? Why haven't they saved enough? That has branched out into investigating if we are capturing the whole picture of what people have saved just based on formal retirement. Maybe people are relying on family and friends. How do we measure the impact of family and friend networks? How much does that informal safety net buffer against the savings shortfall?"

While not a Wall Street expert, Dr. Saad-Lessler's work strives to show the importance of investing in community.

"The U.S. is an individualistic country where success and failure are solely attributed to the individual's actions," she said. "People are valued based on their contributions to society. The downside of this point of view is that older people who no longer work are undervalued and often left to fend for themselves. In some cases, the only person an elderly person interacts with is their mail carrier."

"While government support in the form of Social Security will always be the main source of retirement income, the government can incentivize people to invest in their communities and shift their culture towards more collectivism, in order to increase the role of family and friends in providing support to America's retirees," she continued. "There has been movement in that direction with more and more states offering family caregivers money for their services. We'd like to see the adoption of more incentives, such as Social Security credits for family care. You shouldn't be penalized in terms of your Social Security benefit if you've taken time off to take care for your family."

The Immigration Effect

The next step in her work is investigating how immigration affects retirement. Immigrants are overrepresented in the caregiving labor market, prompting a study on how immigrants affect the availability and cost of caregiving services, and for older workers caring for elderly or sick family and friends, their ability to hire a caregiver and continue working.

"We're looking at women who are in their 50s and older," she said. "If they have to take care of an ailing parent, and it's too expensive to hire somebody, they have to quit and retire earlier than they would have based on their needs. We're trying to see whether the immigrant inflow helps there. A study in Italy shows that in areas with a high[IR1] immigrant share, people are able to work longer because they're able to hire the immigrant caregiver to take care of their loved one."

"It's important to the retirement discussion because people need to work a certain amount to be able to afford to retire," she continued. "And especially for women because the caregiving burden falls on them more than men. Some of the most important years in your working career are past age 50, and if you have to quit earlier to take care of a family member, you're really in dire straits when it is your turn to retire. Who's going to take care of you?"

Back Where it All Started

Integrating immigration and retirement research is a full-circle moment. Before beginning her work on retirement, Dr. Saad-Lessler's work focused on immigration. Her doctoral dissertation at Columbia covered that topic, as did her work as an assistant professor of economics at Long Island University from 2001-12. She began her research into retirement at the New School's Schwartz Center for Economic Policy Analysis, where she was a research economist.

"I'm a labor economist so I'm interested in anything labor-related, but initially I was focused on immigration," she said. "I worked at the New School with Teresa Ghilarducci, and her focus was on retirement. That got me interested in that field, and I've focused my research agenda on retirement since. I do a lot of consulting work for the National Institute of Retirement Security and that became my network."

Written in the Stars

Dr. Saad-Lessler joined the Stevens faculty as an associate industry professor in 2016. After six years working solely as a researcher, her love of academia drove her move back into the classroom.

"I was looking to get back into full-time academia, and Stevens was a wonderful opportunity," Dr. Saad-Lessler said. "It's been fabulous because there are great colleagues to work with. It's a very collegial, wonderful place. Everyone is welcoming, and it's a great place to work."

The stars literally aligned during her undergraduate studies at Columbia for her to discover her passion for academics, research and teaching.

"I didn't know what I wanted to do," she recalled. "I took an astronomy class to satisfy my science requirement and as it turned out, the professor was amazing. I took another course and ended up doing research with him. We went observing a couple of times, gathered data, did an analysis, and I said, 'My gosh, I really love this lifestyle.' I was an economics major, so I decided to get a Ph.D. and embark on an academic career. I love the combination of doing research and teaching."

Giving Students a Home Away from Home

She began her duties as the associate dean of undergraduates in September 2019, just before the Covid pandemic. She models the care, compassion and expectations she shows Stevens' students after her experience parenting four children.

"The balance between discipline and caring you have to develop as a parent is very relevant to my work as associate dean," she said. "How strict do you want to be versus how much do you want to give students a little bit of love and make sure that they're in an environment where they can learn? I think one of the most poignant things that I do as associate dean is interact with parents. I tell parents, 'We're taking care of your kids. Trust us.' When I say that, I have to mean it because I'm a parent myself. We're entrusted with their kids. That's a huge responsibility."

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