Tag Archives: affordability

09.24.26
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This is Embarrassing!

By: Russ Kamp, CEO, Ryan ALM, Inc.

The United States has by far the deepest capital markets in the world, an enormous asset-management industry that has made many participants quite wealthy, and trillions of $s in retirement assets. Yet we rank only 24th of 44 countries for retirement security based on the results from the Natixis Investment Managers’ 2026 Global Retirement index. I find that result embarrassing and you should, too.

The countries ahead of us aren’t necessarily better investors. Many have simply done a better job of making retirement saving broad-based, automatic, and oriented toward producing sustainable retirement income. In addition, they’ve simultaneously reduced risks related to healthcare and longevity that Americans are asked to manage mostly through a defined contribution structure. As regular readers of this blog know, I remain a fan of 401(k)-type plans if they are supplemental to a DB pension offering, but unfortunately, that is rarely the case these days. Again, asking an individual to fund, manage, and then disburse a “retirement” benefit with little to no disposable income, investment acumen, or a crystal ball is just silly.

So why are we so poorly ranked? According to the survey, in which we were once ranked 14th just a decade ago, the U.S. is facing mounting pressures on its traditional “three-pillar” retirement model of government benefits, employer-sponsored plans, and personal savings, as a result of us living longer, DB pension plans going away, and a Social Security trust fund that is projected to be depleted by 2032.

The U.S. score of only 68% looks dismal when compared to Norway’s 83%, which claimed the No. 1 spot from the 44 developed countries included in the survey. Ireland was second with 81%, and the Netherlands came in third with a score of 79%. What do they do better than us? First, the survey isn’t just about retirement security. Natixis evaluates 18 indicators across four broad categories:

Finances in Retirement — inflation, interest rates, tax pressure, government indebtedness, old-age dependency and the strength of the financial system.

Material Wellbeing — income per capita, unemployment and income equality.

Health — life expectancy, healthcare spending and insured health expenditures.

Quality of Life — happiness, environmental conditions, biodiversity and related measures.

So, a country may have a decent, or even good, retirement system but still rank poorly because healthcare, inequality, inflation or government finances create retirement insecurity. Furthermore, most countries ranking ahead of us don’t leave retirement to chance or the individual. The other countries get virtually everyone into a retirement system making savings largely automatic and they make contributions sufficient to produce meaningful retirement income not focused on the size of one’s account “balance”.

Unfortunately, our model since the mid-80s been much more dependent upon individual decisions. An employee has to first work for an employer offering a plan, become eligible, elect to participate, contribute enough, select investments appropriately, avoid withdrawing the money, continue saving after changing jobs, and eventually determine how to convert an accumulated balance into lifetime retirement income. Again, not an exercise designed for the average American worker!

Furthermore, we’ve heaped huge financial burdens on our citizens related to housing, healthcare, education, childcare, insurance, food, energy, utilities, etc. that financing a retirement is nearly a pipe-dream. Not only do we need to once again offer a retirement vehicle that isn’t dependent on the individual for funding, but we need for the U.S. to make living in this country affordable for the masses. Why is it that we spend more $ on healthcare than any other nation yet rank so poorly (only 25th/44) in the survey.

Despite the move from DB to DC offerings, retirement-plan coverage remains an issue. Natixis cites Pew research which estimates that more than 56 million private-sector American workers lack access to a workplace retirement plan. That is a sorrowful statistic. I’ve spent most of my 45-years in the retirement industry focused on protecting and preserving defined benefit plans. I was thrilled to join Ron Ryan and Ryan ALM in 2019 given their similar mission. We need others in our industry to join the fight. Are you ready?

12.09.25
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Time to Get Serious!

By: Russ Kamp, CEO, Ryan ALM, Inc.

This blog focuses most often on issues related to defined benefit pension plans or other retirement-related programs/issues. However, sometimes an issue (in this case “affordability”) captures my attention leading me to respond. As you may recall, last week the WSJ asked the question: Can “Trump Accounts” for babies change the economics of having a family? I posted a note on LinkedIn.com that seemed to get the attention of many of my connections and others, as well.

My response to that question posed by the WSJ was “are you kidding me?” A one-time $1,000 deposit into a child’s account is not even a rounding error in the annual cost of raising a child. Current estimates have the cost of raising a child at >$27k/year for a two-working-adult household and >$300k by the time that child reaches 18, excluding college!

Why would anyone think that a $1,000 contribution to a small subset of children (those born between 2025 and 2028) is going to make a difference in the affordability of having children today? How is this band-aid going to tackle the economic hardship on middle and lower wage earners? Affordability has deteriorated for most Americans because essential costs—especially housing, healthcare, education, and child care—have grown much faster than typical wages, while interest rates and structural constraints (like housing supply) magnify the squeeze on household budgets. This creates a situation in which a larger share of income is needed to absorb basic living expenses, reducing room for saving (emergency fund, retirement, education, etc.), mobility, and discretionary spending (how dare you dream of a vacation) for the majority of households.

We often read about the impact of escalating housing costs (ownership or rent), but healthcare and higher education have seen some of the most significant long‑run price increases, becoming major affordability stressors for a significant majority of American families. Studies of cost‑of‑living trends highlight that health insurance premiums, out‑of‑pocket medical costs, and public college tuition have grown multiple times faster than general inflation and median earnings, increasing debt loads and the potential for financial risk and hardship.

Other necessities—such as food, transportation (try buying a new car), and utilities—have also risen substantially over the past two decades, with food and other goods and services experiencing cumulative price increases of roughly 85% or more since 2000. While some of this price movement reflects broad inflation issues, the problem for households is that real wage growth has not kept pace, so a larger share of one’s take-home pay goes to basics.

Recent high inflation (2021–2023) raised the prices of everyday items and housing costs faster than nominal wages for many workers, compressing real disposable income. In response, the Federal Reserve raised interest rates sharply, which helped moderate inflation but also increased borrowing costs for mortgages, car loans, and credit card balances.​

Given that many households rely on debt to manage education, vehicles, or unexpected expenses, higher interest rates translate into heavier monthly payments and less capacity to save or invest. For younger households and those without assets, this dynamic can delay milestones like homeownership or starting a family, reinforcing a sense that the “American Dream” is receding, if not collapsing!

Less capacity to save for retirement (DC plans) and education (529 plans) is reflected in the median balances for each. I’ve railed about the failure of the defined contribution model being the primary “retirement” vehicle in many blog posts. Asking untrained individuals to fund, manage, and then disburse a benefit with limited, if no, disposable income, a lack of investment acumen, and no crystal ball to help with longevity issues is just poor policy.

Can we stop with the gimmicks, such as these child accounts, and finally get serious about the lack of affordability in this country for a significant majority of Americans! Rising inequality amplifies affordability problems because gains are concentrated among higher‑income and wealthier households while most others face flat real incomes and volatile expenses. “The Ludwig Institute’s analysis, for example, concludes that a minimal but “dignified” standard of living is now out of reach for the bottom 60 percent of households, even around $100,000 in income in some regions, due to the cumulative effect of costs.” (Truthout)

No economy can function long-term when a small sliver of the population earns most of the income, while also benefiting from lower capital gains treatment and reduced corporate taxes. Recent reports suggest that 47% of income is absorbed by the top 10% of wage earners. Other reports suggest that >60% of Americans couldn’t meet a $400 emergency related to a car repair or medical expense without taking on debt. This situation can’t continue unabated.

​As the father of five and the grandfather to 11, I see these economic burdens play out everyday! It is time to get serious!