The creation of a new bipartisan, bicameral congressional working group was announced today, which will be focused on boosting retirement security for millions of low- and middle-income American workers.
U.S. Senators John Hickenlooper (D-CO) and Thom Tillis (R-NC), and Representatives Terri Sewell (D-AL) and Lloyd Smucker (R-PA) formed the group, which will work on legislation to strengthen incentives and expand pathways to savings for workers who lack access to employer-sponsored retirement plans.
“Federal retirement policies are failing hard-working Americans. Around a quarter of working-age adults have $0 in retirement savings, and millions of working Americans lack access to or do not qualify for employer-sponsored retirement plans,” said the members in a May 12 statement.
“We know Americans want to be confident in their ability to save for retirement, but too many lack meaningful options,” the statement continued. “As a core function of government, Congress should enact policies that support retirement saving by all Americans. That is why we are drafting a bipartisan proposal that would help millions of overlooked workers build meaningful savings, achieve financial security, and retire with dignity. By investing in American workers, we can build a stronger economy and a more united country.”
According to a recent EIG survey conducted by Echelon Insights, the vast majority of voters (81%) are concerned about retirement security, with those concerns shared by both Democrats (86%) and Republicans (76%). In addition, only 42% of those polled believe that the next generation will be financially better off than their own.
This outlook is unsurprising given the challenges average workers face in saving for retirement, the statement said. About six out of 10 private-sector workers lack access to a workplace retirement plan, and roughly half of households are at risk of taking a cut to their standard of living in retirement.
“While the current system works well for many Americans, it is simply not designed to encourage savings, reward work, or boost financial security for the tens of millions of low- and middle-income workers who lack access to an employer-sponsored retirement plan and see no benefit from the tax code’s current incentives for retirement savings. “
EIG President and CEO John Lettieri
“EIG applauds the formation of the bipartisan, bicameral congressional working group focused on making much-needed improvements to the U.S. retirement system,” said EIG President and CEO John Lettieri. “While the current system works well for many Americans, it is simply not designed to encourage savings, reward work, or boost financial security for the tens of millions of low- and middle-income workers who lack access to an employer-sponsored retirement plan and see no benefit from the tax code’s current incentives for retirement savings. Enacting better-targeted retirement policy is one powerful way to ensure that all American workers have a direct stake in the rewards of national economic growth.”
Currently, the median net worth for the bottom 25% of American families is only $310, and the median retirement savings balance for the bottom 50% of American families is $0. Roughly half of households risk seeing a decline in their standard of living in retirement.
The working group announcement was also praised by a bipartisan pair of economists Kevin Hassett and Teresa Ghilarducci, who co-authored an EIG white paper last year highlighting the need for federal retirement policy to better support low-income workers. In it, they propose creating a new program modeled after the highly successful Thrift Savings Plan (TSP) for federal workers.
“Government policy has successfully helped millions of Americans save for their golden years but for many, unfortunately, a secure retirement still remains out of reach,” said Hassett, former Chairman of the Council of Economic Advisers and Distinguished Visiting Fellow at the Hoover Institution. “All Americans deserve to be rewarded for their work and given a direct stake in the success of our free-market economic system so that they can grow a nest egg for themselves and for future generations. This bipartisan working group can help level the retirement playing field by increasing incentives and helping to provide benefits for all workers, regardless of their income level or the size of their employer.”
“Retirement security is important for the health and happiness of all Americans, but historically has been hardest to achieve for low- and middle-income workers,” said Professor Ghilarducci, a labor economist at the New School and leading expert on retirement security. “I applaud this bipartisan working group of members of Congress for coming together to bridge the policy gaps in our current retirement system and ensure that underserved workers have access to both the financial tools and the incentives required to build savings for the long run and retire with dignity.”
SEE ALSO:
• House Committee Tackles Retirement Security Issues
• Vast Majority of Americans Believe Retirement Security is a Problem
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
