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Heritage Foundation
Saving for
Retirement -- Without the Government
Amy Payne
May 19, 2014
We can all agree that it’s good for Americans to save for retirement.
But should the government expand from providing old-age entitlement
benefits to controlling personal retirement investments as well?
Whether you want to or not, we’re forced to pay into Social Security
and Medicare. But today’s working Americans don’t have the guarantee
that these programs will be there to carry us through retirement. Why?
The taxes we’re paying now are supporting today’s retirees – not
tomorrow’s. And Congress may change the benefits, especially since
these programs are significantly underfunded.
Ideally, we would have the option to save our own money in the way we
want – and government programs would be the safety net they were
supposed to be, to protect America’s vulnerable from poverty.
Sen. Marco Rubio (R-Fla.) is speaking out on this critical issue of
financial security. He is spot on that our entitlement programs, namely
Social Security and Medicare, cannot continue as they are. They won’t
last for another generation at the benefit levels people have become
accustomed to.
He suggested last week that for those who don’t have a retirement plan
offered through their employers, perhaps they should be able to join
the retirement plan that federal workers (including members of
Congress) have.
It’s called the Thrift Savings Plan, and millions of Americans in
Congress, the federal workforce and the military invest through it. It
is an attractive investment because its massive size and government
subsidies keep its fees low. As Heritage expert Romina Boccia explains,
“the costs of employee education, administrative processing and
collecting are borne by the taxpayer.”
The Thrift Savings Plan is the right type of plan for retirement
investing – but Boccia says another government-controlled plan isn’t
the place to put the millions of American workers who don’t have their
own employer-sponsored retirement accounts. Heritage has advocated an
Auto-IRA (individual retirement account) that would help get more
people saving.
“Unlike a [Thrift Savings Plan] expansion, the Auto-IRA is structured
to promote competition with more, not fewer, employer plans,” says
Boccia, the Grover M. Hermann Fellow. “This would give Americans more
options – and better options – for retirement savings.”
Heritage experts have said that it would be helpful to extend
automatic-enrollment IRAs to those who don’t have this kind of option
at work right now.
“Automatic enrollment is a key part of the Automatic IRA because it
especially helps those groups who are most likely to undersave: women,
minorities, younger workers, and low- to moderate-income workers,”
wrote retirement security expert David John. Plans could be “structured
so that they can be combined and rolled over from one employment
situation to another as the saver progresses through his or her career.”
This would be a win-win for workers. And it would move retirement
savings back into our pockets and away from government-managed programs.
Read this and other articles with links at Heritage Foundation
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