How To Fix Our Retirement System, With Economist Ben Harris

Talking about money and talking about retirement are often one and the same conversation. That’s because every big money decision we make today will impact our financial futures in some way, and we all deserve to enjoy a fulfilling and stress-free retirement. The best way to do that is to save, invest, and plan — which seems straightforward, but we know it often isn’t! 

America’s retirement system is, to a large extent, out of date, and there are currently millions of retirees who don’t have enough saved. Very few people have access to a pension, and Social Security’s cash reserves are scheduled to run out in 2034. According to the Federal Reserve’s recent Economic Wellbeing of U.S. Households report, 60% of Americans aren’t sure if they’re on track for retirement, and the average American has just $65,000 saved for that purpose, which will grow to around $250,000 on average by the time they retire. We know that’s simply not enough. 

It’s clear we need a plan — not just for our own retirements, but for our nation. Economist Ben Harris has one. His track record includes serving as the assistant secretary for economic policy and chief economist with the U.S. Treasury Department, senior advisor to the 2020 Biden campaign, and the chief economist and economic advisor to Biden while he was vice president. Ben recently co-authored a book with economist Martin Baily that addresses all the biggest challenges facing America’s retirement system, and what we can do about it: “The Retirement Challenge: What’s Wrong with America’s System and a Sensible Way to Fix It.”

Ben walks us through what’s right and what’s wrong with our retirement system, especially when it comes to women. What’s right — flexibility, public programs like Medicare and Social Security, and the ability to save huge sums of money. What’s wrong — it’s not always easy to turn your savings into retirement security. Listen in to hear Ben explain why Americans struggle to set up sustainable streams of retirement income, and how that translates to increased rates of poverty in old age for single women and women of color. 

We also dive into longevity risk (the risk of outliving your savings), why it’s an acute problem for women, and how it often adds to the stress of retirement planning. Since nobody knows exactly how long they’ll live, it can feel impossible to pin down a retirement savings goal. 

“People have this rational fear of being in their late 90s or even older without assets,” says Ben. “The way I describe it is like having a friend show up to your house and say, ‘We’re going camping.’ And you ask, ‘Well, for how long?’ And they say, ‘Between one day and three months — pack accordingly.’” 

Luckily, Ben has spent his career studying solutions. He discusses what policymakers, employers, and especially individuals can do to improve the system, from setting up automatic retirement contributions in the workplace to meeting with financial advisors to “stress-test” different longevity scenarios. We also unpack two financial products that historically don’t have a lot of fans — annuities and reverse mortgages — and how they can actually help fill in the gaps left by the retirement system for certain groups of people. 

In Mailbag, we answer questions about saving money in the event of a divorce and determining your budget for a new home. In our money tip of the week, how to make remote work relationships work. 

More on HerMoney: 

• I Have No Retirement Savings. Now What? 
• IRA vs. 401(k): What’s the Difference?
• How to Open an IRA

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