https://www.pbs.org/wgbh/frontline/documentary/retirement/?----------questions included in this may be answered by limiting viewing to the first 34:16 of the video

This PBS video documents the transition from Defined Benefit to Defined Contribution plans and explores the effects on workers' preparation for retirement. Experts report that, on average, only workers earning more than $90,000 per year tend to have retirement balances that grow significantly beyond the level of contributions for reasons discussed in the video.

The PBS video at the beginning of this discussion explores factors influencing a worker's ability to self-manage retirement accounts to achieve a satisfactory level of savings by the time s/he would otherwise be prepared to retire. This following case combines factors found statistically to contribute to an insufficient level of retirement savings. We connect Nadja, the character in our case, with the corporate trends resulting in most workers being given responsibility for managing their retirement saving. In this way, we combine personal and corporate financial concerns.

Nadja, age 22, is typical of many people transitioning into the labor force. Nadja may be relatively unprepared to begin planning for her retirement. She is young, and saving for retirement may seem less important than current needs. She has more education than most Americans, but statistically, she has only a 12% chance of having familiarity with financial principles. Her earnings are most likely low because she has just begun her career. The median income for all individuals holding a bachelor's degree is roughly $60,000 (Torpey, 2018), and workers just entering the labor force are likely to earn less than the median. Half of workers with bachelor's degrees will earn less than this amount, while half will earn more.

Unlike 88% of the population, however, Nadja graduated and received a bachelor's degree. According to the National Center for Educational Statistics, only 12% of individuals earning a bachelor's degree choose to major in business-related subjects (NCES, 2020). As a recent college graduate, Nadja has accepted her first professional position. Without a great deal of life experience, she is confused with the process of "on-boarding" by her new employer. Like 51% of all private sector employees, she has been offered a Defined Contribution Plan as part of her employment benefits package. Nadja is concerned about the retirement plan and is unsure what role it will play in her preparation for retirement.

Nadja does not have a high income, and meeting her basic needs is already a challenge on her moderate wage. She saw her father and grandfather work beyond the age when she knew they were eligible for Social Security benefits, with questionable health and an unquestionable desire to retire to a more leisurely life. Nadja has been told by family members that retirement planning is important. As this is Nadja's first full-time position, she feels it is too early to contribute to a retirement plan when retirement is decades away. Her earnings are also limited in relation to basic financial needs, such as housing and transportation. She wonders whether she should contribute to the retirement plan or wait until later in life to begin saving for retirement.

In this discussion, take on the role of a relative or trusted friend with knowledge of the importance of retirement planning. assist Nadja in determining whether to contribute to a retirement plan offered by her employer. Taking into account trends in financial management that you learned about in this module, consider how typical Nadja's situation is and what issues she and many other employees may face as they age. You are concerned that trends in financial management have caused firms to offer defined contribution versus defined benefits plans most frequently, placing the burden of financial planning on the individual, rather than on the employer.

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