March 19, 2017

AND DON'T WAIT UNTIL THEY'RE WORKING-AGE:

Let's give workers a retirement savings plan at work (Gary Burtless, March 7, 2017, Brookings)

Automatic payroll withholding to help workers save for retirement should be a no-brainer. Both conservatives and liberals worry that Social Security will lack funds to pay for promised benefits after 2030. At the same time, about one-third of workers are "not too confident" or "not at all confident" they will have enough money to live comfortably when they retire. Under these circumstances it seems sensible to make it as easy as possible for workers to save for retirement in the workplace. Twelve years ago George W. Bush proposed giving workers the option of placing up to 4% of their wages or $1,000 in private retirement accounts. (The funds would have come from workers' Social Security contributions.) Oddly, however, most conservative lawmakers are opposed to practical steps to put retirement savings plans in every workplace. This position seems puzzling in view of conservatives' opposition to raising taxes to pay for future Social Security pensions. If Social Security benefits must be trimmed to keep the system solvent, it makes sense to offer all workers, including those without a company pension plan, a simple way to accumulate private retirement savings. [...]

When enrollment in a retirement plan is simple and when savings are automatically subtracted from wages in each pay period, the great majority of prime-age workers will accumulate retirement savings. Even if many end up saving too little, all will have the opportunity of saving something. Most will accumulate more than would be the case if they were forced to save outside of a workplace plan.

Posted by at March 19, 2017 7:49 AM

  

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