Commission on Retirement Security and Personal Savings
The Commission on Retirement Security and Personal Savings was launched in 2014 to examine the U.S. retirement system and offer public policy recommendations that could facilitate increased savings and improve the financial security of Americans in retirement.
Significant change has swept through the American retirement system. Defined benefit pensions are being replaced with defined contribution savings arrangements. Many individuals, however, do not have access to workplace retirement savings plans. Of those who do have access, many are not contributing enough and are at risk for outliving their savings. As a result, millions of Americans may be approaching retirement with inadequate savings to maintain their standards of living.
Areas of focus included:
- Improving federal policies for private savings. Federal law, including the tax code, contains dozens of provisions designed to encourage saving for retirement and other purposes, as well as others that provide a disincentive to save. Policy changes are needed to increase savings and retirement security, improve consumer protection, and reduce administrative burden for employers.
- Expanding access to retirement savings vehicles. Evidence shows that Americans who have access to workplace plans are much more likely to save and be prepared for retirement. Today, only about half of U.S. workers have this opportunity.
- Preserving Social Security for future generations. It is the bedrock of financial security for nearly all retired Americans, and thus, ensuring that Social Security continues to provide a base of income in retirement is imperative. One particularly important aspect is considering how its structure complements private savings.
- Increasing financial literacy and fostering a culture of personal savings. Too few Americans understand the basics of personal finance or the importance of retirement savings. A strong foundation in financial literacy is vital to empower individuals to address their own savings and financial security needs.
Leaders and Commission
Conrad represented North Dakota in the United States Senate for 26 years and served as the chairman or ranking Democrat on the Senate Budget Committee for 12 years. Lockhart was appointed by President George W. Bush as deputy commissioner and chief operating officer of the Social Security Administration and later as director and chairman of the Oversight Board of the Federal Housing Finance Agency. He previously served as the executive director of the Pension Benefit Guarantee Corporation.
The co-chairs are joined on the commission by a mix of former public officials and nationally recognized experts in savings and retirement policy.
During 2014 and 2015, the commission held public events and private roundtables to inform their deliberations with a wide array of perspectives. BPC staff has published a series of white papers and analyses highlighting challenges related to the commission’s work, including short-term and retirement savings, defined contribution accounts, lifetime income, Social Security, and the intersection between homeownership and savings. The commission developed a set of policy recommendations and modeled their impact on personal savings, retirement readiness, and the federal budget.
A summary of our conclusions upon review of the 2018 Social Security and Medicare trustees’ reports, published by the ex officio trustees earlier this year.
In a promising display of bipartisanship, four senators introduced legislation today to help millions of Americans save for retirement.
BPC’s Commission on Retirement Security and Personal Savings spent two years reviewing the challenges facing Americans on the road to retirement and proposing solutions. Take a look at the six challenges to retirement security and what could be done about them.
The next few weeks could have a major impact on America’s fiscal future, with a vote on tax reform coming soon.
The public trustees for Social Security and Medicare have been essential to the oversight of program finances since the official positions were established in 1983.
The Retirement Enhancement and Savings Act would modify some of the existing retirement tax incentives in ways that would improve access to retirement savings.
Financial insecurity can cause many hard-working savers to prematurely withdraw funds from their retirement accounts for unexpected needs.
New bills would advance important goals, such as protecting retirement savings, simplifying account rules, and facilitating lifetime-income options.
The vast majority of 401(k) plan participants and their beneficiaries are on their own to make savings last throughout the remainder of their lives.
One-third of Americans working in the private sector lack access to a retirement plan at work, a disproportionate share of which are employed by smaller businesses.
Several provisions in the proposed Retirement Enhancement and Savings Act of 2016 align with the goals and recommendations of a recent BPC report.
Because of the substantial impact that the age of claiming has on the financial security of many older Americans, the poor information provided by SSA is shocking and deeply concerning.
Taken together, BPC’s recommendations would increase retirement savings by 50 percent for middle-class Americans and reduce old-age poverty by one-third.
Proportionally adjusting benefits based on an individual’s work history is far more equitable and simpler than the current approach.
Despite broader disagreements, members of both parties are working on a modest but important change to improve the Social Security’s benefit structure.
The Old Age and Survivors Insurance Trust Fund, which provides benefits to 49 million beneficiaries, will be unable to pay benefits as scheduled by 2035.
Saving for retirement to ensure financial security in later years is a goal shared by all Americans that unfortunately is not always within easy reach.
More homeowners are carrying mortgage debt later in life, restraining the ability of seniors to finance retirement and age with options in their communities.
Those who have no easy avenue to put aside savings for retirement are much more likely to be financially insecure in old age.
As Baby Boomers move out of the labor force and into retirement, the ratio of workers to beneficiaries will drop to roughly 2:1 by 2034.
What is the best way to ensure transparent, accurate and timely disclosure of fees? Join BPC on May 27 to hear from leading voices on all sides of this debate.
Jason Furman, chairman of the Council of Economic Advisers, and Senator Orrin Hatch headlined a forum on the state of retirement security in America.
Here’s one strategy for savvy savers that can net an extra $10,000 and reduce their risk of outliving assets – without having to work a day more.
Will your savings last in retirement? Many Americans have not even thought about the answer to that question. Among those who have, far too many will say “no.”
The need for action is an opportunity to ensure not only that benefits are preserved for current beneficiaries but also to modernize elements of Social Security.
The program relies on a trust fund that is projected to be exhausted in the fall of 2016.
A congressionally-sponsored commission has recommended significant changes to military retirement benefits that would apply to newly enlisted and commissioned service members.
The system of “cash” scoring that the Joint Committee on Taxation uses only accounts for funds spent and revenues collected over the next few years, but saving for retirement is a lifetime process.
The law will require employers to either offer an employer-sponsored retirement plan or automatically enroll their employees into the new Secure Choice program.
Congress acted to make target-date funds the default investment in the retirement plan for federal employees.
The spending bill that passed the House last week included a bipartisan provision that would allow certain underfunded pension plans to reduce benefits that were promised to retirees.
The American Savings Promotion Act, which will allow banks to offer depositors lottery entries (in lieu of interest) in “Prize-Linked Savings” accounts, passed the Senate by unanimous consent earlier this week and is now headed for President Obama’s desk.
Under the new law, eligible Americans with disabilities, family members, and friends could make deposits into “ABLE accounts,” which will be a new class of the existing 529 accounts that are designed to facilitate saving for higher education.
One of the challenges that defined contribution plan participants face is how to turn their savings into income that will last through the end of their lives.
The commission examines whether savings rates and available savings vehicles are meeting the retirement goals of Americans and the nation’s investment needs.
A Diversity of Risks: The Challenge of Retirement Preparedness in America explains the complexity of the U.S. retirement system through the eyes of four illustrative households.
When evaluating the retirement security landscape, complexity is the one constant.
The Senate Finance Committee hearing comes just months after BPC officially launched its Commission on Retirement Security and Personal Savings.
By offering auto-enrollment, higher default contribution rates, and/or auto-escalation, employers can help their employees save more and better prepare for retirement.
Defined Contribution accounts, such as 401(k)s and IRAs, make up a large and growing part of retirement security for those employed in the private sector.
This morning, the trustees of Social Security released their annual report, which includes an assessment of the program’s financial health. The Social Security actuaries estimate that under current law, the Old-Age and Survivor’s Insurance (OASI) Trust Fund will be depleted in 2034 (one year earlier than projected last year), while the Disability Insurance (DI) Trust Fund will be depleted in late 2016, unchanged from last year.
Many Americans, including those near retirement, have not saved enough. The Employee Benefit Research Institute finds that over 40 percent of Americans are at risk of running short of money for expenses in retirement. The combination of low saving rates, insufficient emergency funds, and increased responsibility for workers has left too many Americans without adequate savings for retirement to supplement their Social Security benefits.
The number of companies offering any sort of defined benefit (DB) retirement plan of the sort that used to be common for employees of large unionized companies has steeply declined over the last few decades. DB plans guarantee retirees a specific cash benefit, often defined as a percentage of average salary during the final few years of employment, for the duration of their retirement. Even the prosperous companies on the Fortune 100 list in 2013 have been quickly shedding DB plans since the late 1990s.
Roughly 44 percent of Americans say they are not prepared to meet emergency expenses. When asked if they could come up with $2,000 in 30 days, one-quarter of the people surveyed said that they were certain that they could not. An additional 19 percent responded that they would be forced to sell possessions, such as cars, furniture, or their homes, to do so.
The personal saving rate has been declining in this country for many years. Although the saving rate has jumped around, the long-term trend is clearly downward. The reasons for this long-term decline are difficult to pinpoint but likely include stagnant real incomes for many workers, rising standards of living and higher consumption, and a weaker dollar than in the past.
Prize-Linked Savings (PLS) accounts are like standard savings accounts – but instead of accruing interest, savers are entered into a lottery for larger amounts of money. In the U.S., PLS products are available only in some states and on a limited basis, but they are already employed widely in over 20 countries around the world.
Kent Conrad, Co-Chair Former U.S. Senator, North Dakota Former Chair, Senate Budget Committee James B. Lockhart III, Co-Chair Vice Chairman, WL Ross & Co. LLC Former Principal Deputy Commissioner, Social Security Administration Todd F. Barth President, Bowers Properties Inc. Board…
On Wednesday morning, the Bipartisan Policy Center will launch the Personal Savings Initiative (register to join us here). The initiative will be led by former Senator Kent Conrad, who served as chairman of the Senate Budget Committee, and James Lockhart, who served as deputy commissioner of the Social Security Administration and other key roles in the executive branch. Their effort will be supported by a bipartisan commission of nationally recognized experts who will examine legislative and regulatory avenues to improve Americans’ personal savings and retirement security.
Evidence of a growing retirement problem in the United States continues to surface. As the graph below illustrates, private savings has fallen significantly in the last 55 years. And the United States isn’t the only nation facing retirement challenges. Last…