Background, no people
Almost everyone agrees that we have now a retirement income crisis, and extraordinary employees have little hope of retiring and maintaining their lifestyle if this will not be the case each retirement provision And expanded social security. One doesn’t replace the opposite. Employees need each. Since we broke up the unions and gave the wealthy tax breaks in various forms, the concept of retirement has fallen out of sight. All advocates of employee income security must concentrate on the numerous levers to secure retirement income.
Yesterday In The hillNancy J. Altman—a respected analyst on the prices and advantages of Social Security who has been a vital resource for me in understanding the complexities of presidency provision of wealth and Social Security—and her co-author made some puzzling errors within the senator’s explanation John Hickenlooper and Thom Tillis’ The invoice to assist all employees accumulate assets to complement social security.
When low- and middle-income employees unionize, they negotiate to redirect a portion of their wages to build up retirement assets in defined profit and defined contribution plans. No teacher’s aide, home health aide, miner, auto employee, janitor or barista just wants Social Security.
Retirement planning for Americans act (RSAA)
I urge Nancy to take a re-evaluation on the bill, which she called a “Wall Street giveaway.” It solves the issue she cares about, as greater than half of employees don’t have any approach to save for retirement at work: 40 years of regressive tweaks and tax breaks have hit these employees harder than the opposite half of employees, namely Over 80% of low earners don’t have any retirement provision at work. (For more evidence on all this, see Chart book for older employees and retirement from the Economic Policy Institute and the Schwartz Center for Economic Policy Analysis.)
Low-income employees have neither the unions they need nor employers willing to volunteer significant amounts of cash toward their retirement.
Senator Hickenlooper’s laws would allow employees to contribute as much as 3% to a secure, government-sponsored account, while the federal government would contribute 5% for employees earning below the median income of about $60,000 per yr . Employees could change or reject their withholding at any time, but we all know that if there’s one to matchEmployees keep their money to enhance their retirement savings.
We have ample evidence that this works. When low-income earners received a generous subsidy through the federal Thrift Savings Plan (TSP), they saved much more for his or her retirement. Unfortunately, Nancy Altman and James Russell misunderstood the part about Hickenlooper’s law. Low- and moderate-income employees could be eligible for as much as 5% in matching contributions through a refundable federal tax credit. This could be paid directly into the worker’s retirement account and could be phased out at middle income levels.
Retirement accounts would remain owned by employees throughout their lives, and employees would have the flexibility to stop and resume contributions at will or as eligible. Similar to the present TSP, participants could be offered a number of easy, low-cost investment options to pick from, including lifecycle funds tied to a employee’s expected retirement date or index funds made up of stocks and bonds.
The Hickenlooper bill would do more to extend retirement income security for working individuals who need assistance most, and positively for all of the people left behind by Secure 2.0. In addition to those necessary reforms, we also need an expansion of social security.
We need all leverage (not attacks) to secure retirement
This is not the primary time advocates have freaked out and thought something will replace their program – when in point of fact it just complements it.
The far left attacked Social Security in 1935 because they feared it will weaken the movement general pensions. The insurance industry attacked Social Security since it feared it would cut back demand for insurance—which it didn’t. Yesterday, Altman and Russell attacked the RSAA because they fear it may lead to less support for Social Security. The American Retirement Association is attacking the RSAA over fears of reduced support for 401(k)s. We must all advance our shared goals and defend low- and middle-income employees’ access to retirement. (I assume general unionization would work too, since unions negotiate retirement plans.)
I need what Nancy wants. I agree together with her if she wrote in defense of a hybrid system in 1988:
The selection of a hybrid pension income system using subsidized employer pensions and public insurance is important. The current system has strengths that is probably not available in a unified system. A hybrid system offers flexibility and structuring benefits which are necessary in a sophisticated economy but difficult to realize as a part of a nationwide universal program. It also more easily results in greater diversification of control over large sums of amassed assets.
401(k)s aren’t a alternative for Social Security and we cannot depend on Social Security alone. Countries that achieve comprehensive pension provision accomplish that with each advanced funded and social security pensions. If the U.S. wanted to realize a goal alternative rate of 70% of FICA, the payroll tax would have to be around 30%.
The solution to the country’s retirement income crisis will not be so simple as expanding Social Security alone. The non-partisan Retirement Savings for Americans Actwhich is currently pending in Congress, is a vital a part of the answer.
