Thursday, February 22, 2007

Ask the Administrator: Money, Retirement, and HR

An occasional correspondent writes:

After landing a full time tenure track job, I was eager to begin managing my income in the most savvy way possible. However, after six months on the job I’m somewhat perplexed by the lack of information and/or confusing information I’ve been given by various staff at my college and my colleagues. When I went to my initial HR orientation meeting, the parameters of our excellent retirement fund were not really touched on so I made it a point to visit the relevant website, talk to folks through the retirement fund and learn what I needed to know. First problem solved. When I asked folks in HR and payroll regarding the feasibility of beginning an additional retirement savings plan such as a 403 (b) I was given some extremely sketchy information which was included on a one paged list of plans that I could contact on my own to find out more information. However both HR and payroll implied that I should “get my finance person” to do the research for me and that this was not the sort of task to be approached by the autonomous faculty person. As I don’t “have a finance person” I began researching the plans on my own. I did contact our payroll department a few times to ask follow up questions and been more or less rebuffed. Is this lack of information common or have I just landed at a somewhat oblique and unhelpful school? I have no doubt that I’ll eventually finalize my 403b selection and make a good decision, but I’m just wondering if it’s supposed to be this hard to try to be a responsible person and save as much of my salary as I can. Shouldn't the college be shoving this sort of information down our throats?

I’ve also tried to discretely and politely ask some of my new colleagues about their saving strategies and I’ve basically encountered divergent responses. Either it seems like people can’t afford to put any additional money away so they can’t provide any advice or experience or they look at me as though I must be some crazed capitalist captain of industry in the making who is only asking these questions because I have a break between meeting with contacts at my conflict diamond mine in South Africa and my sweatshop in Mexico. I guess this leads me to my second question. Without engaging in hugely problematic stereotypes do you think, based on the responses I’ve encountered, these are the most common attitudes towards cc faculty regarding retirement savings? It seems like a problem to me to think that our great retirement plan, however great it is, will do *all* the work we need it to do to retire happily someday. What gives with faculty attitudes towards saving?

It's a neat question, since it directly contradicts what I've seen. As regular readers know, the f-t faculty at my cc is quite senior, with most within a few years of retirement. TIAA-CREF balances are very popular topics of conversation.

At both my current college and my previous one, HR does/did a good job of organizing workshops for financial planning for retirement. (I don't think either college assumed that anybody had a finance person. I kind of like that, though. "We have people for that sort of thing...") In fact, the HR department here actually puts together an oversize grid detailing the various investment options for retirement accounts, including fees for each.

I'm neither an economist nor a financial advisor. That said, I don't think you need to be either to make basically sound decisions about retirement. (Sometimes I think the best fifteen bucks I ever spent was on Personal Finance for Dummies.) If you accept a few premises from the outset -- free money is good, fees are bad, and the market is both unpredictable and merciless -- several clear decisions follow. (My theory is go with low-fee index funds, put in at least enough to get the employer match, and hope for the best. I offer no guarantees.)

At Proprietary U, we had 401(k)'s instead of 403(b)'s, but the concept was similar. I recall sitting down at lunch with one of my favorite colleagues there and explaining to him why it made sense to at least contribute enough to get the full employer match. "Free money," I think, was the key phrase. At my cc, enrollment in a retirement savings account is actually mandatory, though you get to choose which account.

Certainly there are larger issues here as well. For example, at my cc, as at many colleges and companies, 'defined benefit' pension plans are not available to anybody hired after a certain date. (I didn't have the option, for example.) The idea is to shift the risk from the employer to the employee. Rumor has it that the market crash of 2000/2001 delayed several pending retirements, since folks who were planning on a big payout suddenly couldn't get it. Andrew Hacker's recent book details what he calls 'the great risk shift,' but it's nothing that anybody observant wouldn't have spotted by now. The upside of the great risk shift is that it enhances employee mobility. Under the old defined benefit system, if my job search took me to, say, California, I'd lose the years towards a pension here. Under the new system, my money moves with me. Tenured faculty, as a group, aren't the most mobile people in the world, but it's worth keeping in mind.

(There's also the ever-present adjunct issue, since they don't typically accrue retirement benefits. As risk shifts go, the trend towards increasing adjunct percentages is a doozy.)

All of that said, there is a weird culture around money-talk in academe. It's a funny blend of moral indignation, bad conscience, shock at the gap between length of training and actual salaries, and a vague sense that, as a 'called' profession, we aren't supposed to focus on such things.

I reject those assumptions wholeheartedly.

If my blog has an underlying theme, it's that academics are employees and colleges are employers. The sooner we can move away from moralistic posturing, denial of basic economic reality, a sense that we're too pure for this world, and guilt over the fact that we're economic actors just like everybody else, the healthier we'll be. One of the real contributions of the proprietary schools to the discourse around higher ed has been to strip away much of the romanticism and to call attention, unapologetically, to the economic foundations of what we're doing.

Are you unsatisfied with the paltry pay from adjuncting? Stop adjuncting. Walk away. There are other jobs. Are you unsatisfied with the pay and/or benefits at your current college? Look for another employer. It's okay. It's not 'disloyal,' or 'corporate,' or 'mercenary' -- it's basic self-preservation, which is everybody's right. Is it fair? Sometimes not, but just getting indignant about it won't change anything.

Part of the burden of being a progressive in today's America is that you have to be able to think along multiple tracks at once. At the systemic level, it's absolutely fine to advocate for national health care, a daycare system worthy of our kids, fully-funded public education, etc. But you also have to take care of yourself and your family. If your HR department is doing a crappy job of apprising you of your options, then by all means do a little background research for yourself. (If they think that you shouldn't worry your pretty little head about money, then you have a terrible HR department.) I've found, too, that most mutual fund companies are more than happy to shower you with information for the asking. You need to know how to filter it, but the basics are fairly simple.

Why is your college being so obtuse? I have no idea. It may be fear that anything that could be construed as 'advice' could come back to haunt them if it doesn't work. It may be that some key administrators simply aren't very bright. It may be that key people were trained under the old 'defined benefit' system, and just never learned the new way. Whatever it is, though, don't make their problem yours.

Loyal readers in blogland -- does your college/employer do a decent job helping you decipher retirement benefits? And what's your read of the weird academic reticence around money matters?

Have a question? Ask the administrator at ccdean (at) myway (dot) com.