Why retirement portability is desperately needed
The author of this article makes a strong point that retirement portability is essential for our retirement system to work well for all citizens, and argues that there’s a strong need for modern, innovative portability solutions to help participants when they change jobs.
While I know this author on a personal basis, it’s not because of that relationship that I agree with his assessment.
Poor investor behavior, whether it’s losing track of old investment accounts, not consolidating retirement savings, or prematurely cashing them out, can all be traced to the same root cause. Investors need easier solutions, including the ability to easy port their savings from one account to another.
I’ve always liked the Canadian system where, as I understand it, they have a universal form of IRA that stays with the individual. This means that it’s critical under their system for a retirement account to be easily exchangeable from one financial institution to another to get the best results.
While the US is unlikely to move to the Canadian approach, we ought to consider these best features of it and incorporate them into ours.
HSBC combines data and behavioral analysis for new app
HSBC is testing a new money management app that uses push notifications to nudge customers into saving more and spending less.
While I like the idea of “nudges” to change investor behavior, as behavioral economists suggest, I believe the best nudge is a plan for the future that offers a real chance of success. When it comes to retirement planning, that nudge may very well be the near-certainty that you’re going to achieve a comfortable level of income.
As I’ve said before, retirement is about the income your future self can achieve, not about today’s volatile level of savings.