The 180-Day Retirement Decision: Choosing Between ORP and MSERS in Massachusetts Higher Ed
New faculty, librarians, and administrators at Massachusetts public colleges and universities have 180 days to choose between the Optional Retirement Program (ORP) and the State Employees’ Retirement System (MSERS). The choice is irrevocable. Once made, it can’t be revisited in year five or year twenty.
Most of the information available to make that decision focuses on contribution rates, formulas, and projected balances, comparing what each plan is designed to do on paper. Less attention goes to a separate, well-documented body of research on what account holders actually do with a self-directed retirement account once it’s open, and on how well any of that can be predicted in advance for someone who hasn’t yet built a track record.
That research doesn’t argue for one plan over the other. Both plans are well-designed for what they’re built to do. It’s a case for understanding, going in, which parts of this decision are knowable in the moment and which aren’t.
Most Account Holders Never Touch Their Allocation
A widely cited study of TIAA-CREF account holders tracked investor behavior over 12 years. It found that 73% of investors never changed their asset allocation, and another 14% rebalanced only once.[^1] A separate study of retirement accounts found even greater inertia, with nearly 90% of investors never altering their portfolios.[^2]
This matters for higher ed specifically because these plans often offer much broader investment menus, typically three to five times as many options as a standard corporate 401(k).[^3] More choice at enrollment, combined with a documented tendency never to revisit that choice, means the allocation someone selects at 25 or 40 often remains the allocation that carries them into retirement, regardless of what happens to markets or their own circumstances over the following decades. That’s a fact about how people use these accounts, not a criticism of the accounts themselves.
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When People Do Act, the Timing Tends to Work Against Them
Inertia isn’t the only pattern worth knowing. The minority of investors who trade tend to do so at costly times. DALBAR’s long-running Quantitative Analysis of Investor Behavior (QAIB) tracks the gap between what the S&P 500 returns and what the average equity fund investor actually earns, after accounting for the timing of their own buying and selling.
Over the 20-year period ending in 2024, the S&P 500 returned 10.35% annually, while the average equity investor earned 9.24%.[^4] That roughly one-point annual gap compounds into a large difference over two decades. A hypothetical $100,000 left untouched in the S&P 500 over that period grew to $717,503. The same amount, subject to the average investor’s real-world buying and selling decisions, grew to $585,600.[^5]
The gap isn’t constant. In 2025, it narrowed to just 0.72%, the third-smallest gap since 1985.[^6] In 2024, it was 8.48 percentage points, the second-largest gap of the past decade.[^7] The pattern is real, but it varies significantly year to year, driven mostly by investors’ responses to volatility.
Risk Tolerance Questionnaires Don't Reliably Predict Any of This
Most retirement plans ask new participants to complete a risk tolerance questionnaire at enrollment and then set an allocation based on the score. Research on how well these questionnaires predict future behavior is limited.
A review published in the Financial Planning Association’s journal found that most risk tolerance questionnaires include items with no clear link to established risk tolerance theory and that little research has examined the relationship between questionnaire responses and actual portfolio behavior.[^8] The same research compared questionnaire responses with what investors actually did with their portfolios following the 2008 financial crisis, specifically to test whether stated risk tolerance predicted real behavior under stress.
Among the individual questions tested, the one with the greatest predictive power wasn’t a hypothetical scenario question at all. It was a simple, backward-looking question: what degree of risk have you assumed in your investments in the past?[^8] Revealed behavior outperformed stated preference. A new hire, still within the 180-day window, has no revealed behavior yet to draw on. Not because of anything specific to them; nobody does before they’ve lived through a real decline.
Why 180 Days Is a Genuinely Hard Window
None of this is a knock on either plan. MSERS offers a guaranteed formula with no market exposure, but its protections have real limits worth noting, including a cost-of-living adjustment capped at 3% of the first $13,000 of a pension and a 10-year vesting cliff. ORP offers portability, immediate ownership, and full participation in strong markets, but it asks the account holder to make exactly the kind of decisions the research above describes, often without yet knowing how they’ll actually respond to one.
The honest reason this decision is hard isn’t that the information is missing. It’s that some of what would help most, such as how a specific person actually behaves under pressure, can’t be known until it’s tested, and by then the decision is already made.
Even the Model's Creator Didn't See This Coming
Ted Benna is widely credited as the architect of the modern defined contribution model. In 1980, while working as a benefits consultant, he read a little-noticed provision in the Revenue Act of 1978 and realized it could allow employees to defer part of their salary into a tax-advantaged savings plan.[^9] The provision was never intended to become the primary way American workers fund retirement. Benna himself has said it was never meant to replace pensions; it was conceived as a supplement, not a substitute.[^10]
He’s been candid, decades later, that he didn’t anticipate how completely defined contribution accounts would come to stand in for the guaranteed income traditional pensions once provided, or how much responsibility that shift would place on individual account holders to make decisions that even the plan’s own architect didn’t fully foresee.[^11]
That’s not a reason to avoid these accounts. It’s a reason to take seriously how much is being asked of the person managing one and to make that decision with clear eyes about what’s predictable going in and what isn’t.
The Missing Variable: Predicting Your Own Behavior
This isn’t a case for choosing one plan over the other. It’s a case for entering the 180-day window aware of what can and can’t be predicted at that point. Contribution rates and projected balances are the visible part of the decision. Behavior, and how difficult it is to forecast in advance, is a real part of the picture too, whichever plan someone ultimately chooses.
Questions about how this applies to your specific situation, career plans, and broader retirement picture are worth working through individually, either within or outside the 180-day window.
Every educator’s numbers, risk profile, and timeline are different. To see if my services are the right fit to help you make this decision, request an introductory call or call me directly at 508-277-5847.
These are the opinions of Financial Advisor Tim Hayes and not necessarily those of Cambridge Investment Research. They are for informational purposes only and should not be construed or acted upon as individualized investment advice. Content provided via links to third-party sites should not be considered an endorsement of content that we cannot verify completeness or accuracy of.