Spring 2009 Issue

Ready, Set…Retire?

Communication professor Connie Hicks is helping Americans better plan for retirement, even deal with the dreaded decumulation

By Jasmine Kripalani

Unemployment at record highs, stocks at record lows, and added to the mix is the growing consensus that most Americans will have to put retirement on hold, if they are able to retire at all.

In the past this might have sounded like hyperbole but several studies over the years have found that Americans face a significant shortfall when it comes to securing their financial futures.

Quarterly figures released in February by the U.S. Bureau of Economic Analysis, for example, show that Americans’ personal savings rates have been on a decline since 1981 – even dipping into negative numbers in mid-2005. Only recently has that trend shifted upward with the latest February figures from the Commerce Department showing that the personal savings rate decreased slightly to 4.2 percent in February, compared to 4.4 percent in January. The two-month span marked the first time that the savings rate had been above 4 percent in more than a decade.

To counteract that trend, the Financial Industry Regulatory Authority Investor Education Foundation (FINRA), a national nonprofit whose mission is to educate investors, decided to fund a series of stories that would focus on issues related to retirement planning, especially retirement decumulation. Technically speaking, decumulation is the conversion of pension assets accumulated during an employee’s working life into pension income to be spent during retirement. However, what it really means in the current economic climate is the possibility of running out of money.

The 16-month, $478,800 grant allowed PBS’ Nightly Business Report to team up with U.S. News & World Report to produce news segments that would inform the public about the variety of retirement options with companion articles appearing in the news magazine.

Created in 1979, Nightly Business Report (NBR) is a half-hour financial news program that airs every weeknight to a national audience.

When NBR Managing Editor Wendie Feinberg was looking for talent to host a series of segments titled “Get Your Finances Ready for Retirement,” she knew she wanted someone who could relate to the challenges baby boomers face. So she quickly turned to a former colleague from WPLG- Channel 10 in South Florida, Connie Hicks.

Before becoming an associate professor and professional-in-residence in Barry’s Department of Communication in 2004, Hicks had worked as a television reporter for 25 years, mostly in the South Florida market. She has experience covering daily and investigative stories and is the recipient of two Emmy awards.

Hicks, along with Joe Collum, is one of two former television reporters contributing packages for the series with topics ranging from annuities to long-term care insurance.

Since the segments began airing in May 2008 the economy has worsened with a high number of Americans in foreclosure and more taxpayer money going to bail out the banking and auto industries.

“The whole point of this series is to highlight issues that people who are in their 40s, 50s and 60s are going through. We wanted someone with real-life experience,” Feinberg said referring to Hicks being close to retirement age.

And Hicks said she has the same questions and concerns about retirement that her some of her viewers do.

In December 2008, Hicks did a story in which she tested the accuracy of online calculators that allow people to calculate how much money they will need to retire.

She asked Anthony White, an air traffic controller for the Federal Aviation Administration (FAA), to use three online calculators using the same numbers and assumptions. The criteria included the assumption that he would retire at age 55, with a life expectancy of 90 and an annual 3 percent inflation rate, annual investment returns of 5 percent in his pre-retirement years and 4 percent in retirement.

The results surprised everyone. All three calculators showed vastly different results. One calculator even suggested he would need to save $300,000 a year to meet his goals.

The best advice, Hicks said, should come from a professional money manager.

In another story, Hicks addressed the issue of reverse mortgages.

She began her piece this way: “If you love your family home, perhaps the last thing you want to do when you retire is to sell it and move away. But staying put on a fixed income may not be easy. And if it's a problem, Robin Talbert of the AARP Foundation says a reverse mortgage is often seen as a solution.”

But some experts Hicks spoke to said reverse mortgages should be a tool of last resort because of the high fees and interest rates.

To breathe life into these abstract business terms, it’s important to personalize the stories, Feinberg said.

“Business journalism is about people and people who run businesses,” she said. “They are always people stories and we try and tell it from someone’s point of view.”

Hicks agrees and sometimes, finding the right person means traveling throughout the nation.

When interviewing financial planners, Hicks said she has to often ask them to use simple language to describe complicated business terms.

“You have to make sure they speak in layman’s terms; it’s not a time to impress the audience with what they know, it’s a time to explain what they know,” Hicks said.

“I will say everyone I have met [has] been wonderful – a real slice of life from Florida, Arizona, Washington,” Hicks said. “These people have really opened their lives, and to some degree their financial situations, to a national audience.”

Jack Kahn, executive producer for the retirement series on the Nightly Business Report, said a team of academic experts and reporters and editors from U.S. News & World Report helped NBR to come up with the story ideas.

“When we put the grant proposal together, the first of the baby boomers were about to retire,” Kahn said. “And a lot has been written that a good part of them haven’t saved enough. The angle we’ll take is that if you’re getting close to retirement how can you remain financially solvent regardless of how much you’ve saved.”

Kahn adds that the series is especially useful because of the current record-setting lows in the market.

“In light of the stock market, Social Security is an even more important part of retirement,” Kahn said. “It used to be that people got pensions. Pensions have been replaced by 401ks and 403bs [which have] taken such a hit; [retirees] have to figure how they’re going to get by on less.”

Hicks confessed that the series of stories motivated her to make better decisions about her own retirement.

“I have decided to start saving more money and plan for retirement sooner,” Hicks said. “I am seriously looking into long-term care health insurance, which I doubt I even knew about before, and taking Social Security as late as possible. One of the first people we interviewed in Kendall, made a comment that has struck me ever since. He said, ‘If you plan for retirement, it should be the best years of your life.’ I had never thought of it that way before.”