1. Retirement & Behavior in Our Defined Contribution Society Is Retirement Past its Prime? Michael S. Falk, CFA ProManage, LLC

2. Overview  Today’s Retirement  What has been Learned  Tomorrow’s Retirement

3. Today’s Retirement 1.Demographic Landscape 2.Economic Implications 3.The Individual

4. Demographic Landscape  Shifting Dependency Ratio(s)  Globalization

5. Economic Implications People Can…RetireNot Retire Focal Point Dependency Ratio rises Government Costs rise GDPMay ▼? InflationMay ▲? Cost of CapitalMay ▲? Investment ReturnsMay ▼?

6. The Individual  Increased Responsibility  Lack of Financial Literacy  Education has been about Quantity How much can be saved How much will be needed

7. What has been Learned 1.Lifetime Income 2.Behavior 3.Quality Matters

8. Lifetime Income  The Defined Benefit Demise Changing regulations Creative destruction  Social Security Designed as social insurance Became USA’s DB plus

9. Behavior  “Hedonistic” Consumption  Inertia Defaults  Choice Less is more  Loss aversion & Regret

10. Quality Matters  Is Retirement the “Best” Goal?  Health & Happiness

11. Tomorrow’s Retirement 1.Employment Incentives 2.Behavioral Solutions 3.Social Insurance 4.Innovative Designs

12. Employment Incentives  Phased Retirement  Quality of Life

13. Behavioral Solutions  Design success Defaults as a Positive Overcome inertia Overcome de-motivating choice Overcome financial literacy hurdles Limit irrational behavior

14. Social Insurance  Social Security 73 Demographic destiny? Today’s biological equivalent Too important to too many But, negatively impacts savings behavior

15. Innovative Designs  Re-Define Retirement  Income Solutions