"Increases in the CPI (inflation that has already happened) have no direct effect on defined benefit plan sponsors. Increases in the CPI will, however, decrease the value (buying power) of participant/retiree annuities. To the extent expected future inflation increases interest rates, liability valuations will go down.... In a defined contribution plan, all risk, including inflation risk, is held by the participant. Sponsors will want to consider [1] communicating with participants about the effects of inflation on asset allocation decisions and retirement income targets and [2] reviewing the fund menu with a view to making inflation hedges available. Annuitization adds a unique inflation exposure -- increases in the CPI directly reduce the value of a fixed dollar annuity."  MORE >>

"9 in 10 plan sponsors are weighing the economic carrying cost of pension obligations against the risks these plans expose their organizations to ... The current interest rate environment is a tailwind for pension risk transfer ... Another biggie making PRTs more attractive? Pension plan participants living longer.... And don't forget the historically favorable annuity buyout market ... [S]maller plan sponsors are finding validation in the actions of larger corporations[.]"  MORE >>

"In DB plans: Inflation does not directly affect sponsor finance, but expected future inflation will increase interest rates, reducing liability valuations.... For participants, increases in the CPI directly reduce the value/buying power of participant/retiree annuities. In DC plans: Increases in the CPI directly reduce the value of a fixed dollar annuity, making the annuitization decision (when and whether to annuitize) especially consequential and sensitive to inflation volatility/risk."  MORE >>

" '[T]he service codes in the 2018 Form 5500 filings of [10 other employers' 401(k) plans, produced by the plaintiffs,] indicate that the services provided are different or more limited than those the plan participants receive. Most notably, none of these 10 purportedly 'comparable' plans offer participants the pension consulting or valuation services [USI Consulting Group] offers to the plan participants,' according to the order." [Cunningham v. USI Ins. Servs., LLC, No. 21-1819 (S.D.N.Y. Mar. 25, 2022)]  MORE >>

"This paper addresses this gap in the literature and provides a more robust understanding of retirement behavior by examining the transition from full-time work to fully retired among dual earning couples ... [T]he consistent finding is variation across couples in the length, sequence, leader, concordance, and labor supply in the move from full-time work to fully retired. Using simple heuristics to classify joint retirement trajectories allows us to gain perspective in the rarity of full simultaneous retirement and motivates future research into the joint use of partial retirement by couples."  MORE >>

"While the 4% rule recommends clients withdraw the same amount each year (adjusted for inflation), it's important to recognize that spending needs vary throughout retirement.... The first phase is typically the most active, when retirees are embracing things like travel and the hobbies ... The second phase is when their pace declines, and the third is when their medical expenses outpace money spent at restaurants or the country club[.]"  MORE >>

"For most [Financial Independence, Retire Early (FIRE)] followers, the investment strategy tends to rely on low-fee traditional index funds and exchange-traded funds (ETFs) that offer a safer and more affordable return on your investment. Unfortunately, this means that for FIRE, most people shy away from a sustainable investment strategy due to fears of sacrificing financial returns. But sustainable investing does not always require a performance tradeoff[.]"  MORE >>