During a Senate Finance Committee hearing Thursday, members on both sides of the aisle addressed the issue that nearly half of Americans don’t having enough retirement savings.
Both Chairman [crscore]Orrin Hatch[/crscore] of Utah and Ranking Member [crscore]Ron Wyden[/crscore] said it is critical for Congress to take action and encourage more people to save.
“The bad news is that, with the retirement of the Baby Boom generation, the fiscal pressure on public programs designed to benefit retirees – programs like Social Security and Medicare – is growing exponentially, putting enormous strain on the federal budget and driving the expansion of our long-term debt and deficits,” Hatch said in his opening statement. “As this pressure mounts, participation in private retirement plans will be more and more important.”
Alicia H. Munnell, the director of the Center for Retirement Research at Boston College, said the retirement landscape is rocky and needs “bold changes” since around 50 percent of U.S. households won’t be able to maintain their standard of living upon retirement in today’s financial climate.
Munnell suggested during her testimony that Congress enact national auto-IRA legislation with the option for consumers to opt-out.
“People left on their own are not going to save. That’s why we have Social Security and employer plans,” she said, adding it should be more difficult to withdraw savings to prevent leakage.
Joint Committee on Taxation Chief of Staff Thomas Barthold told the committee small employers may be discouraged from offering plans due to high costs.
While John J. Kalamarides. the head of Institutional Investment Solutions Prudential Retirement, said allowing long-term, part-time employees to contribute to employer sponsored plans would be a major step in helping low-income earners save.
Earlier this week, the Obama administration unveiled a retirement proposal encouraging automatic enrollment into IRAs. Critics of Obama’s plan feel the cap placed on savings would affect more than just millionaires, preventing more investors from saving than expected.
“Given the incredible problem we have with getting people to accumulate enough to supplement their Social Security, it seems strange that policies would be modified to put arbitrary constraints on the amount people could save,” Jack VanDerhei, research director at the non-partisan Employee Benefits Research Institute, told CBS News.
Despite push back, some Republicans in the upper chamber support the idea of auto-IRAs.
“Chairman Hatch has long advocated for policies that will encourage more Americans to save for their future to help provide for a secure retirement. Providing incentives to increase access to savings vehicles, like voluntary automatic enrollment features, is an issue that he has supported,” a Finance Committee spokesman told The Daily Caller News Foundation in an email following the hearing. “The chairman will continue to examine this issue and work with colleagues on both sides of the aisle to determine the best approach for achieving this goal.”
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