Retirement security ‘is shakier than ever’ and ‘Americans are not saving enough’ for old age
Americans’ retirement security is unstable, and legislation focused on pensions, Social Security and other savings or healthcare concerns must be a priority for government officials, a group of 31 organizations wrote in a recent public letter to President Biden.
Companies, economic think tanks and other organizations signed a letter urging the president to create an inter-agency task force from some of the top government departments, including the Department of Labor, Department of Treasury, Securities and Exchange Commission and White House Gender Policy Council. The letter was signed by ADP, Edelman Financial Engines, Employee Benefit Research Institute and Prudential, to name a few.
“The proverbial three-legged retirement stool is shakier than ever. Social Security and Medicare face financing shortfalls, while pension plans have largely disappeared for younger workers,” the letter, published on the Bipartisan Policy Center’s website, stated. “At the same time, rising life expectancies, soaring health care and long-term care costs, and rock-bottom interest rates have created new risks to retirement security.”
See: Were older workers hurt disproportionately by the COVID recession?
The government needs to prioritize retirement security, especially because it is so much more than the money Americans use in their old age, said Jason Fichtner, vice president and chief economist at the Bipartisan Policy Center. “We need to think more holistically, not just about retirement but the milestones and episodic shocks that happen.” This includes crippling student debt, money management, familial and household responsibilities, use of credit, emergency savings when the unexpected occurs and everything else leading up to retirement, he noted.
There must also be more attention paid to Social Security, which is facing an insolvency issue in the next decade and a half. “When you look at this objectively, the rational conclusion is that the Social Security program must do more to take the place of the missing pension,” said William Arnone, chief executive officer of the National Academy of Social Insurance. More analysis and conversation must be dedicated to determining how to pay for the program and any expansion, he said.
Near-retirees could use more guidance upon retirement, which an inter-agency taskforce could provide. “Modern retirement requires baby boomers to navigate a series of decisions ranging from Social Security to Medicare to retirement income and more,” said Rhian Horgan, founder and chief executive officer of retirement planning app Silvur. “Continuing a siloed approach to supporting retirees as they navigate these decisions further complicates the process.”
A partnership among the agencies could help in multiple areas, including caregiving for aging parents or children, as well as the connection between health and wealth, Horgan said.
These organizations, among others, are partners in the “Funding Our Future” initiative, which has three key goals: make it easier for Americans to save, help them transform their savings into retirement income and support the needs of Social Security for current and future retirees.
Americans are not saving enough for their futures, and face the risk of falling short of maintaining their standard of living in their old age, the letter said. The current pandemic is exacerbating the issue. But an executive order establishing this task force and requiring a biannual report for the president and American public, as well as a biannual summit, could help.
“With millions of Americans at risk of falling short in retirement, time is of the essence,” the letter stated. “A majority of Americans worry about running out of money in retirement, making it the country’s most common financial worry. Public policy can address many of the urgent challenges facing workers’ retirement savings and income.”
