Roger W. Ferguson, Jr. Remarks at University of Massachusetts Boston Fall Convocation

Monday, September 13, 2010
(As prepared.)

Good morning. Thank you for inviting me to UMass Boston to help you celebrate the start of the 2010-2011 academic year.

This time of year is filled with enthusiasm and optimism. It’s a time to meet new friends, new professors, and new students. A time to dive into new classes and, for most, to crack open new books.

I have a bachelor’s degree, a law degree, and a Ph.D., so you can probably guess that I enjoyed my academic career. I kept coming back for more. And now as CEO of TIAA-CREF, I get to visit college campuses across America. It’s one of the highlights of my job.

Universities are filled with energy, with youth, with creative thinking. When you combine these ingredients, you have a recipe for innovation – a formula for solving challenges and answering persistent questions.

We confront many challenges and questions today. To address them, we need to harness the individual and institutional strengths of this institution and many others.

You start this academic year at a time of continuing uncertainty in the economy. Unemployment remains stubbornly high. Growth out of the financial crisis has been steady but slow – “painfully slow,” as President Obama said on Friday.

You may be experiencing this personally. Perhaps you’ve lost a job or had your hours cut back at work. You may be tightening your belt at home so that you can continue to attend school.

Universities will play a significant role in moving our economy and our country forward. That is especially true for an urban university like UMass Boston, which expands opportunity during difficult times by making education accessible and affordable.

UMass Boston students are, in a very real sense, in the right place at the right time.

You are developing your individual strengths by acquiring new skills and knowledge that will give you an advantage over less-educated peers in any job market. Over the course of a career, the college degree you’re earning could result in hundreds of thousands of dollars of additional earnings.i

In an economy increasingly pitched toward services, students seeking professional degrees in fields such as medicine, law, and engineering will develop the specializations and critical thinking skills that are sought by employers.

You are also contributing to the strength of this institution. The research and experimentation undertaken by faculty and students are the first steps toward innovations that will move our entire economy forward and lead to greater opportunities across sectors and at various levels of experience and skill.

As a society, we need innovations to solve a host of challenges that will shape our future. Today I’d like to discuss a few of these challenges – namely, retirement security, health care, energy and the environment, and the ethical implications that shape progress in all these areas.

I’ll start with retirement security, which is the subject I know best. And I want to make it clear that I’m not just speaking to the professors, administrators, and others who may be thinking about retirement in the near future. I’m speaking to students, too, because this is a challenge that has long-term, multigenerational consequences.

Last month, I was surprised to read the results of a retirement survey by Ipsos, a respected polling firm. Ipsos asked respondents their opinion of several issues on the retirement landscape, including pensions. One of the most interesting findings is that half of respondents said they wish they had a pension – even among the youngest workers, people between the ages of 25 and 34.ii

This was anomalous because most people who are new to the workforce have little experience with pensions. Thirty years ago, more than 80% of private-sector workers had pensions. Today, only about a third do.iii

So why the interest in pensions among young workers? I think the answer is that people who are starting their careers during a time of tremendous economic uncertainty are hungry for financial security.

They’re wondering whether they can pursue their passions and still have lifetime financial security.

People are living longer today, which means that many of us will be retired for two decades or more. Supporting yourself through 20 years of retirement requires steady income. How will you provide that? And how will private-sector organizations like TIAA-CREF, and public policy makers, respond to the need for lifetime income?

Social Security provides a basic level of income, which is vital. But the system is facing its own fiscal and demographic challenges. And many workers will need to supplement Social Security with another source of lifetime income to meet their needs.

Individual retirement accounts, such as IRAs and 401(k)s, are the vehicles most people use to accumulate savings for retirement. But the most serious economic crisis in 70 years has led people to question whether they can rely on market performance alone to meet expenses in retirement.

The ideal situation is to have a steady stream of income through retirement that can meet basic expenses and help you live comfortably. Pensions can provide this guaranteed income. Annuities can also provide guaranteed income.iv But whatever people choose, the message is clear: A rising generation of workers is looking at the uncertainty of the economy and the markets and seeking more security.

Some of the same demographic issues that influence the retirement challenge are also present when it comes to health care, the second challenge I’d like to discuss. Americans are living longer, which is of course welcome. But living longer costs more money – for individuals, businesses, and society.

Medical innovation is expensive. Today, we can rely on drugs to control a host of conditions from high cholesterol to diabetes. New therapies are turning more cancer patients into cancer survivors. And with advances in genetics and targeted therapies, the hope is that we can soon have more effective treatments for conditions such as Alzheimer’s and Parkinson’s.

Each new drug therapy can cost upwards of $800 million to bring to market.v How will we pay for these advances? And how will we ensure the broadest and most equitable allocation of health care resources?

Health care also presents serious generational implications, as we must come to grips with the fact that – as with Social Security – younger people typically pay the costs for older people. It’s been estimated that health care costs in retirement could run between $200,000 and $800, Will individuals be prepared to bear the cost of living longer?

The third challenge to consider is the energy and environmental challenge confronting nations around the world. While people hold different opinions about the effects of our use of natural resources, almost all agree that long-term reliance on fossil fuels isn’t good for our economy, our national security, or our environment.

Alternatives exist and are in their infancy. How do we develop these alternatives, make them cost effective, and design the infrastructure to support alternative fuels and use energy more efficiently?

Time magazine recently reported on investments made through the American Recovery and Reinvestment Act – also known as the stimulus bill. A substantial portion of these investments are devoted to pursuing innovation in renewable energy and green design.

The Act contains some very specific clean energy goals:

  • Lowering the cost of solar power by 50%, to put it on par with the retail cost of existing electrical power;
  • Cutting the cost of batteries for electric vehicles by 50% and making electric cars affordable;
  • And doubling the nation’s capacity for generating renewable energy.vii

Our nation is making a substantial investment to change the way we power society. Who will lead the way in meeting these goals? Who will develop the technology to make the batteries that can power the cars and homes of the future? And who will develop the business and marketing plans to put these new technologies in tens of millions of homes?

As we make progress in each of these areas – retirement security, health care, and energy – we will confront a fourth challenge: how to promote innovation and growth ethically.

In business and finance, ethical lapses became clear in the aftermath of the market meltdown and credit crunch. Many people disregarded long-term consequences and acted irresponsibly as they sought to maximize financial gain. The results were ruinous.

Sustainable economic growth in the future will require businesspeople to ask not only “Is this profitable?” but “Is this the right way to do business?”

In health care, new advances often present tough choices about how to deliver care, how to pay for care, and who should receive what types of treatment. These choices carry ethical considerations.

Energy usage of course has an ethical dimension – the impact on the natural environment, on people’s livelihoods, on neighborhoods.

And in an age when technology connects us more than ever before and holds the potential for limitless access to information, where do we draw lines? How do we ensure privacy?

Another goal of the Recovery Act is to lower the cost of sequencing a human genome to $1,000, so that scientists can map 50 genomes for the same price it costs to map one genome today. With genetic information more commonly available – and so deeply personal – how do we ensure that people and organizations act responsibly with the information?

Universities are where ethics should be taught and debated – where your values as people and as future leaders are honed. If you think about your responses to ethical dilemmas in the classroom, you’ll be more likely to make the right decisions when you confront these questions in your lives and careers.

Charting a way forward in each of these areas will require expertise across fields – engineering, math, medicine, law, business and entrepreneurship, philosophy, industrial design, psychology, history, social justice, public policy, and more.

Often, knowledge in one subject can be applied to areas that aren’t immediately obvious. For instance, some of the most interesting advances in promoting savings and retirement security come from the field of psychology. Behavioral economics helps us to understand not just what rational economic actors should do, but what real people really do. By tailoring policies, products, and communications to the way people behave and the way they view their choices, we can help them make wiser financial decisions.

Today, as information is democratized, we should expect innovative ideas and solutions to come from a wide variety of sources. Society is expanding the boundaries of research to incorporate ever more people in the drive for new technologies – from developing electric vehicles to building next-generation spacecraft.

TIAA-CREF is also harnessing the wisdom of the crowds. We’re using Facebook to generate ideas for increasing our national savings rate, which is crucial to individuals’ long-term financial security and to the future growth of our economy.

Our Raise the Rate contest has elicited more than 450 suggestions from people who are eager to let their creativity bloom. The ideas run the gamut from regulatory changes and tax policy, to ad campaigns and financial literacy programs, to clever new tools for helping people to save.

The deadline for submissions is next Monday, and I encourage you to submit ideas. The entries will be judged by a panel of three experts and me, with the winner receiving a $50,000 grand prize. In addition, the college or university whose students, faculty, and alumni submit the most entries will receive a $25,000 endowment.

You can find more information on our Facebook page or at “”.

Universities are such rich sources of innovation because they are home to diverse people and interests, multidisciplinary expertise, rigorous analysis, and free ideas.

Universities are places of continuous improvement … where we enhance our knowledge, our skills, our ability to think and analyze and work collaboratively to reach common goals.

You are part of a creative community – and I urge you to harness all the resources this university has to offer.

The time you spend here – as teachers and learners – has the potential to be immensely rewarding personally and to prepare you to make lasting contributions to society.

For those of you who are preparing to go into the workforce – or back into the workforce – I encourage you to think broadly about your careers.

We traditionally think of our careers in terms of a ladder – each rung representing increased responsibility or compensation, but always in the same direction. I like to think instead of a career climbing wall. Start in one direction, then move up, then take a step over, then move diagonally upward in another direction.

The goal is still the same – to advance, to take on more responsibility, to attract higher pay – but the path is more open. You may be offered a great opportunity that appears to be a lateral move. But if you can learn from it, encounter new challenges, make new contributions, and take away a new perspective or a new skill set, it will be worth the detour.

My own career has followed this trajectory – and it’s benefited from a bit of serendipity.

I didn’t start at TIAA-CREF fresh out of college and work my way up through the company over 35 years. I followed my interests in different directions – to law school, to a doctorate in economics, to a law firm, to a consulting firm where I specialized in information technology, to the Federal Reserve, to a global reinsurance company, and finally to TIAA-CREF.

In my current job, I draw on the variety of experiences I’ve had in my career to lead the entire organization. I’ve benefited from seeing how different companies work – and I can apply that perspective to help my company and our employees overcome today’s challenges and prepare for the future.

I hope the energy and excitement you feel now, looking at the promise of a new academic year, follows you throughout your time at UMass Boston and throughout your life.

As you develop your own career strategy, seek opportunities in which your passions and your skills are aligned. That may not be possible with every job. But if you bring energy to each job you have – and do each job well – you will broaden your perspective, deepen your human capital, and hopefully find a few of those serendipitous moments when opportunity and success find you – even if from an unlikely source.

Over the next few years, as you begin a career, change careers, or come to the end of your career, you will likely seek security – job security, financial security, retirement security. But don’t confuse being secure with playing it safe.

The progress, innovation, and growth our economy and society need will be driven by people who take risks and avoid complacency … those who harness the energy, creativity, and fresh thinking of the university and apply them to persistent challenges.

You may help to bring down the cost of solar power, or give us access to the most advanced genomic medicine. You may be pursuing “a-ha” moments, or bringing new inventions to the masses.

Wherever you’re headed, the future will begin right here, at UMass Boston. May you be proud of the work you accomplish this year and successful in all that lies ahead.

Thank you very much.

i Pilon, Mary, “What’s a Degree Really Worth?” Wall Street Journal, February 2, 2010.

ii “Half of Americans Wish They Had a Pension,” Ipsos release, August 4, 2010. Poll conducted April 21 – May 4, 2010.

iii EBRI Databook on Employee Benefits, Chapter 10: Aggregate Trends in Defined Benefit and Defined Contribution Retirement Plan Sponsorship, Participation, and Vesting, updated December 2009.

iv Lifetime income is a guaranteed stream of income subject to the claims-paying ability of the issuing insurance company.

v Singer, Natasha, “Seeking a Shorter Path to New Drugs,” New York Times, November 14, 2009.

vi Employee Benefit Research Institute (EBRI), June 2009.

vii Grunwald, Michael, “How the Stimulus is Changing America,” Time, August 26, 2010.

Annuity account options are available through contracts issued by TIAA or CREF. These contracts are designed for retirement or other long-term goals, and offer a variety of income options, including lifetime income. Payments from the variable annuity accounts [and mutual funds] are not guaranteed and will rise or fall based on investment performance. Mutual funds do not offer the range of income options available through annuities.

TIAA-CREF products may be subject to market and other risk factors. See the applicable product literature, or visit for details.

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