The retirement industry has a moral obligation to help Americans get to a place financially where they can live a secure and dignified retirement, says Ben Thomason, executive vice president of Vestwell.
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“To me, at a core level, there’s a moral and ethical obligation to give people a chance to be able to save in the most economical and beneficial way for them for their retirement. That’s what the 401k does,” Thomason said.
He added, “It really points back to the paternalistic attitude that companies have towards individuals who are working now. The world’s a little different, and the employment marketplace is a little different, than what you might have found in the late ’70s and early ’80s.”
Thomason isn’t just talking about the pandemic, which has changed so much about everything we do now. 401ks have unseated pensions as the primary retirement savings tool for workers, and the last several years have seen the rise of the gig economy. Today, an increasing number of Americans work multiple jobs, sometimes as an employee and sometimes as an independent contractor, Thomason noted.
“There are, by some tallies, almost 50 million of those in our workforce nowadays,” Thomason said of independent contractors, “and, as you might imagine, a lot of these folks are uncovered in the sense that they don’t have an employer-sponsored savings plan because there’s no employer.”
There’s a nascent movement to change that, as some of the “biggest ‘independent contractor’ organizations, Lyft and Uber, are facing pressure from states they operate in that maybe the individuals who work for those organizations are full time employees, and therefore deserve to be treated as full time employees as opposed to independent contractors,” he said.
There’s some debate over whether the retirement savings shortfall amounts to a “crisis,” but whatever you call it, it’s clear that Americans need to save more. However, access isn’t necessarily the problem, Thomason said. Anyone can open a savings account, but to successfully save for retirement, people need access to the payroll side.
Related: 4 Reasons Why Access to a Retirement Plan is a Major Advantage
“If I can save the money before it gets into my hands and spend it on something else, the likelihood of me being more successful in retirement is exponentially greater,” Thomason said. “That’s the real trick — that’s the accessibility [issue], not necessarily actually offering an IRA account or an investment account to individuals not covered by workplace plans.”
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