March unemployment reached 4.4%, nearly a whole percentage point over February, as businesses were forced to reduce workforces or close their doors to comply with stay-at-home measures intended to limit the spread of COVID-19.
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The Insured Retirement Institute drafted a five-point plan outlining steps that policymakers can take to help Americans address loss of savings as furloughs and layoffs take a bite out of retirement accounts.
“Our first concern is to defeat the spread of the COVID-19 virus and protect Americans’ health,” according to Wayne Chopus, IRI president and CEO. “But looking ahead to when the nation’s leaders begin to lift social distancing measures and Americans return to work, we will need a recovery plan to help retirement savers.”
Paul Richman, IRI chief government and political affairs officer, said, “The proposal we are putting forward consists of common-sense policy recommendations to help workers recover and mitigate their losses. If enacted, we believe they will go a long way towards preventing many Americans from experiencing a retirement crisis on top of the health and economic effects of this terrible pandemic.”
In an effort to help Americans keep money in their accounts for longer, IRI proposed increasing the age for required minimum distributions to 75, and eliminating barriers that prevent savers from using lifetime income products.
“IRI’s recommendations focus on creating more opportunities for Americans to keep their tax-deferred retirement savings longer as a way to recoup some of the losses resulting from the COVID-19 crisis,” Chopus said. “It also offers the means for employees who have been negatively impacted to enhance their ability to save more for their retirement.”
To that end, IRI is calling for catch-up contributions for people affected by COVID-19, expanded savings opportunities for nonprofits, and clarification of the startup tax credit for small businesses joining multiple employer plans.
The SECURE Act, passed in January, set many of these plans in motion, including raising the RMD age to 72, more portable lifetime income options, and making it easier for small employers to join MEPs,
“What IRI is proposing today will help Americans as our nation begins its recovery from the COVID-19 pandemic by enhancing savings opportunities during their remaining working years so they can enjoy a secure and dignified retirement,” Chopus said.