Retirement inequality solutions key to workers’ ‘ability to retire with dignity’: Portfolio manager

TIAA Portfolio Manager Misi Simms joins Yahoo Finance Live to discuss TIAA's movement to fight retirement inequality.

Video Transcript

DAVE BRIGGS: With rates rising and stock-market volatility, retirement security is a significant concern for many Americans, especially for women and minorities on the short end of the wage gaps. This prompted TIAA to launch its Retire Inequality movement, which aims to help all people retire comfortably.

Joining us now for more on this is TIAA portfolio manager Misi Sims. Misi, nice to see you. If you could, get to the root of that problem. Why is there that enormous gap?

MISI SIMS: Thanks for having me. There are a number of reasons why, when you dig into the research, why these inequalities exist. I think one of the biggest reasons is just access. Roughly half of Black America, African Americans have access to an employer-sponsored retirement plan. And so if you don't have access to the retirement plan itself, it makes it hard to actually save for retirement.

Another reason is just education, financial literacy. Oftentimes-- and I'm sure you can appreciate this-- if you don't have an understanding of markets and how they function, it can be a scary proposition to invest money there. So we think financial literacy is one and also access to these types of employer plans relative to other demographics are the two main factors.

SEANA SMITH: Misi, given the fact that so many people do not have access to those types of employer plans, I guess then the next question is how do we fix this or how do we see significant improvement on an issue that is so critical and very concerning for millions of Americans?

MISI SIMS: I think the first thing is care. We all have to take this seriously and consider the fact that it's a part of, you know, our responsibility as a society to help all of us retire with dignity and with security. So this is why we started the-- if we can call it a campaign. I think it's more than just a start and finish type of campaign, though. I think it's a movement, like you said.

So talking about it, having a conversation, challenging one another to think of creative ways to support every worker's ability to retire with dignity is a start. And, you know, us partnering with different influencers in the country and around the world-- athletes, artists-- to get the message out is the first step.

DAVE BRIGGS: Yeah, some of those artists, Elena Delle Donne, tremendous basketball player; Dawn Staley, legendary figure in hoops; Sedona Prince. How have they helped get the word out there? How much can companies do to help change this gap?

MISI SIMS: Well, they've gotten involved by having spots during March Madness, for example, or just during the season that they're involved in. I think companies can get more involved, and I think this is a big part of the SECURE 2.0. They can get involved by-- you know, that legislation was transformative and I think for three main reasons. One, it allows employers to automatically enroll new employees into the retirement plan.

Imagine when you guys just first started working. I can go back to myself. You're trying to find out where the bathroom is, where the paperclips are. You're not thinking about retirement in that moment. So now when you start a job, you're automatically enrolled.

Another aspect of the legislation was that catch-up contribution. So if you didn't save rigorously in your 20s or 30s or even 40s, now when you hit a certain age in your 50s, you can start saving more and catching up and making up for some lost time.

Another big component to the legislation was that if you weren't saving because you were appropriating funds to pay down student loans, your employer can now match those student loans and put those funds into the employer-sponsored plan. So this touches a large demographic. I think it's very generous and much needed to facilitate this move towards retirement security.

SEANA SMITH: And also, Misi, what is the difference in terms of the gap that we see and how much men typically save for retirement versus women and why that is so concerning going forward given the fact that women, life expectancy-- they have a higher life expectancy than men?

MISI SIMS: I have three daughters and a wife, so this means-- this hits home for me. So women typically earn, let's say to keep the numbers nice and round, $0.80 on the dollar compared to men, right? So if you make less, you're more than likely to save less, and therefore you're likely to have less in retirement.

And like you mentioned, longevity risk. Women typically live longer than men, so that just exacerbates the problem. And this is exactly why we want to bring more light to this threat because it's a serious threat, and we want to mitigate it and, if not, remove it altogether.

SEANA SMITH: I certainly agree with all that. Misi Sims, great to have you. Thanks so much for joining us.