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Plan Well, Retire Well

Saving and investing your money

More on the Changing Landscape for Post-Retirement Benefits

Legal scholars Richard Kaplan, Nicholas Powers, and Jordan Zucker detail the "increasingly troubled state of employer-provided health benefits for retirees" in a recent analysis. Their paper, published in the Yale Journal of Health Policy, Law, and Ethics (Vol. 9, No. 2, 2009), is titled "Retirees at Risk: The Precarious Promise of Post-Employment Health Benefits." (A version of this paper is also available on the Social Sciences Research Network website for download.) They document the economic and financial pressures on private business firms that help explain the erosion of retiree health benefits, and they highlight the adoption of new accounting rules that force firms to recognize the financial cost of retiree health benefits on their books as a major factor in the decline of employer-provided retiree health benefits. They also turn their attention to public sector units claiming "another wave of broken promises may lie just ahead" since the state and local government employers also need to represent these obligations in their accounting.


The overall message of this paper for retirees and for people planning for retirement (that includes nearly all of us!) is the significant erosion already in employer-provided retiree health benefits and the real chance of further declines in employer-provided health coverage for retirees. For the individual few good strategies exist to remedy the loss of coverage. Certainly, those of us in the planning years and period of our lives when we are saving and investing for our future financial security may need to bump up our saving rates to help cover the short-fall and be ready to have some flexibility in our retirement budgets to handle changes. A letter to your legislative representatives expressing concern about the week legal protections provided by ERISA may also be in order.

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