Apr 23 2014, 2:25pm CDT | by Forbes
A comfy retirement for all! Talk about an ambitious goal. The Bipartisan Policy Commission today launched a year-long project, the Personal Savings Initiative, to address the U.S. retirement crisis. Among the topics it will address are 401(k)s, defined benefit pensions, Individual Retirement Accounts, Social Security, long term care insurance, reverse mortgages, and college debt.
“Everything is on the table,” said Jim Lockhart, vice chairman of WL Ross and former deputy commission of Social Security under President George W. Bush. Lockhart is leading the initiative along with former Senate Budget Committee Chairman Kent Conrad, a Democrat.
Lockhart invoked the elusive three-legged stool of retirement security: Social Security, employer pensions and personal savings. “Three legged stools are pretty uncomfortable. We have to make it more of an easy chair for the American people,” he said.
“It’s not only getting to retirement, it’s living through retirement,” Conrad said of the group’s focus.
Lockhart cited a recent Gallup poll that found that not having enough money for retirement is the top financial worry among middle-aged Americans. Then he recapped some sobering retirement statistics to show why the issue is so important and why Congress should take it up.
The personal savings rate has been declining; defined benefit plans are becoming obsolete. Only 38% of workers made contributions to workplace retirement accounts in 2013 (in large part because only 46% are offered one). Householders near retirement didn’t have enough saved (account balances for all households with heads age 55 to 64 averaged $12,000; $100,000 for households with retirement accounts). And a quarter of American households said they couldn’t come up with $2,000 in 30 days time; another 19% could only come up with $2,000 by selling possessions or resorting to a payday loan.
Audience members threw out more issues for the Commission to address: longevity risk, financial exploitation of older adults, public sector plans, and financial literacy education. Conrad added yet another, conjecturing whether hybrid pension plans might make a comeback.
The idea is to gather good ideas from plans that have already been developed, throw in some more, and come up with a bipartisan plan. Sen. Tom Harkin (D-Iowa), Congressman Dave Camp (R-Michigan), Sen. Orrin Hatch (R-Utah), and the Obama Administration all have retirement proposals circulating. The most important thing is to agree on the facts and get something that is clearly bipartisan, that could ultimately get passed and become law, Sen. Pete Domenici (R-New Mexico) chimed in.
Why the one-year deadline with a 2015 due date? Conrad predicted renewed interest in retirement security in Congress after the November elections, although he admitted it might not be until after the next presidential election that anything gets done. “We’ve got a problem and the sooner we address it the better,” Lockhart said.
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