In a letter sent to Secretary of Labor Elaine Chao as she prepares to open the final SAVER Summit, members of Americans for Secure Retirement, a coalition of 34 organizations representing a broad cross section of interests, urged Chao and Summit attendees to explore solutions addressing often-overlooked elements of the retirement security debate.
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Two of the most significant elements the coalition would like to see addressed are:
- The need for solutions that go beyond employer-based programs, as almost half the American workforce does not work for an employer offering such programs; and
- The need not only to encourage people to save more but also to manage those savings better.
Need for Solutions Complementing and Extending Employer-Based Programs
“People are often surprised to learn that 58 percent of the American workforce will depend solely on Social Security or their own personal savings to fund their retirement,” said Larry Mitchell from the American Corn Growers Association. “The numbers are far more dire for farmers and other ‘at risk’ populations who are far less likely to have an employer-based retirement plan. As a nation, we simply must provide better ways for people to save for retirement above and beyond employer-based retirement plans.”
The letter notes that the strengthening of employer-based retirement plans was a critical first step. It also notes that of the 152.7 million Americans employed in 2004, only 81.2 million worked for an employer or union that sponsored a pension or retirement plan and even fewer (63.9 million) participated in the plan. Among the demographic groups identified as ‘at-risk’ populations are: Hispanic-Americans, African-Americans, Native-Americans, women, and farmers. These groups, and others like them. face greater retirement challenges and tend to participate far less in employer-based retirement programs. The declining rate of defined benefit plans, in which a steady income stream is guaranteed throughout retirement, also increases the urgent need for policymakers to provide mechanisms all Americans can use to prepare for their retirement.
Need for Saving Mechanism and Help Managing Savings to Last a Lifetime
"Part of the challenge in this country is encouraging people to save enough for retirement, but an equally significant issue is giving people the tools they need to manage those savings so they last a lifetime,” said Elizabeth Gehl of Business & Professional Women. “No one should live in fear that their savings will run out just when they need it most.”
The letter notes that Americans are living longer, with life expectancy today being 80 years of age for men and 84 years of age for women. Further, the letter states the nearly one-third of women currently of retirement age will live well into their 90s, while one-in-thirty will live to 100. As increasing numbers of individuals spend 30 or more years in “retirement”, the ability to stretch their savings over longer periods becomes increasingly important, especially with the present uncertainty regarding the ability of Social Security and pension income to meet their needs.
Members of Americans for Secure Retirement advocate providing incentives that encourage Americans to purchase annuities with a lifetime payout, which assure them of a guaranteed income stream for life. This solution not only helps individuals save for retirement but also manage their savings during retirement.
The group also supports solutions such as the Retirement Security for Life Act (HR 819/S 381) and other similar legislation that will help provide holistic solutions accessible to all Americans, especially those considered at-risk, which many coalition members represent.