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Text of Seventh Circuit Opinion Affirming Dismissal of Northwestern University Fiduciary Breach Suit (PDF)

"Rather than compare Northwestern's actions to those of a 'hypothetical prudent fiduciary,' ... plaintiffs criticize what may be a rational decision for a business to make when implementing an employee benefits program.... That plaintiffs prefer low-cost index funds to the Stock Account does not make its inclusion in the plans a fiduciary breach.... Plaintiffs also spill much ink in their amended complaint describing their clear preference for low-cost index funds. We understand their preference and acknowledge the industry may be trending in favor of these types of offerings.... Plaintiffs failed to allege, though, that Northwestern did not make their preferred offerings available to them. In fact, Northwestern did.... Taken as a whole, the amended complaint appears to reflect plaintiffs' own opinions on ERISA and the investment strategy they believe is appropriate for people without specialized knowledge in stocks or mutual funds." [Divane v. Northwestern Univ., No. 18-2569 (7th Cir. Mar. 25, 2020)]

ERISA Suit Against Northwestern Has Second Life 15 Months After SCOTUS Ruling

"The appeals court judges conceded March 23 that the Supreme Court had rejected a so-called 'categorical rule' in which 'providing some low-cost options eliminates concerns about other investment options being imprudent.' Plaintiffs complained about excessive record-keeping fees and the fiduciaries' failing to select lower-cost shares of mutual funds and annuities." [Hughes v. Northwestern Univ., No. 18-2569 (7th Cir. Mar. 23, 2023)] 

Supreme Court Will Hear Northwestern University 403(b) Plan Excessive Fee Case

"According to the Solicitor General, the inclusion of more than 100 retail class mutual funds in the plan is sufficient to support a viable claim of breach of fiduciary duty. Though conceding that cost is not the only appropriate consideration in selecting funds, the Solicitor General argued that where cost is the only difference between funds, it is imprudent to select the higher cost alternative." [Hughes v. Northwestern Univ., No. 18-2569 (7th Cir. Mar. 25, 2020; cert. pet. granted No. 19-1401, Jul. 2, 2020)]

Americans Believe They Will Need $1.46 Million to Retire Comfortably

"People's 'magic number' for retirement rises faster than inflation, jumping 15% in just a year and a whopping 53% since 2020; while retirement savings falls to $88K. The 'Silver Tsunami' is here: 11,000 Americans will turn 65 every day through 2027; only half of Boomers+ and Gen X believe they'll be financially ready for retirement.... Gen Z started saving at 22 and expects to retire at 60; Boomers+ started saving at 37 and expect to retire at 72."

America's Youngest Adults Plan to Retire Earlier Than Any Generation Before Them

"Americans between the ages of 18 and 25 -- known as Gen Z -- were the most likely to build savings during the pandemic and begin working with an advisor.... Seven in 10 (70%) adults from the age group reported higher savings over that time period. They were also more likely to seek professional financial help, with nearly three in 10 (29%) saying they did not have an advisor before the pandemic but have either started working with one or plan to moving forward. Despite that, close to 75% of Gen Z adults said their financial planning needs improvement."

Americans Now Believe They Will Need $1.25 Million for Comfortable Retirement

"U.S. adults aged 18+ anticipate they will need $1.25 million to retire comfortably, a 20% rise since 2021. At the same time, Americans' average retirement savings has dropped 11% -- from $98,800 last year to $86,869 now -- while their expected retirement age has risen -- now 64, which is up from 62.6 last year.... More than four in ten (43%) people say they do not expect to be financially ready for retirement when the time comes. And 45% say they can imagine a time when Social Security no longer exists."

DOL Rule Generates Flood of Comments and Petitions

"The DOL reported 1,001 individual comments received during the [15-day comment] period, which closed March 17. These comments came from all corners -- activists, consumers, advisors and agents, companies such as Northwestern Mutual, trade associations and even lawmakers -- and appear split for and against the rule."

Americans' Attitudes and Behaviors Toward Finances and Planning

"The vast majority (69%) of U.S. adults are taking a self-directed approach to planning which may be exacerbating already complex financial challenges ... U.S. adults are deeply concerned about financial security before and during retirement, yet ... 30% of U.S. adults say they are 'not at all financially prepared' to live to the relatively 'young' age of 75 while more than a third do not have any sense of how much income they may need in retirement; 62% of working Americans expecting to delay retirement by necessity, citing insufficient savings as a top reason."

The Retirement Income Challenge: Deferred Income Annuities Before Retirement (PDF)

"Setting assets aside before retirement to buy a DIA places a portion of the retirement portfolio into a bond-like financial vehicle and these funds should be viewed as such when evaluating the overall asset allocation ... When a retirement plan allocates a portion of its assets to a DIA, the average cost of retirement is reduced by softening the financial blow of a long lifetime or poor market returns. The purchase of a DIA before retirement is particularly valuable for clients who would have maintained a stock allocation lower than 70%.... [S]hort deferral DIAs can reduce the cost of funding retirement, provide longevity protection, and provide important behavioral benefits to clients concerned about near retirement market performance."

Retirement Planning Through the Decades

" 'Imagine taking a 30-year vacation and the amount of time it would take you to plan what you're going to do and for you to fund it-- that's what planning for retirement is about,' says Rebekah Barsch, vice president at Northwestern Mutual.... The sooner you begin to save though, the more time you'll have on your side.... Experts provide guidance on steps to take during each decade."