The American Association of Retired Persons (AARP) came out with a survey earlier this year revealing about one-quarter of U.S. adults over age 50 who are not yet retired say they never expect to retire. The results of the survey run counter to the American Dream of retiring after decades in the workforce.
Millions of Americans count on monthly Social Security payments, a pension or a 401(k) plan and personal savings and assets to carry them through their retirement years. However, as prices and the cost of living continue to rise, a concern has emerged among many Americans that they have not saved enough for retirement and will have to work into their golden years to survive.
In addition, pensions are no longer a dominant instrument for retirement.
In 1975, there were 27.2 million active participants in private sector pension plans but by 2020, that number had dropped to 12 million, according to the Congressional Research Service based on data obtained by the U.S. Department of Labor’s Bureau of Labor Statistics. Meanwhile, the number of participants in plans such as 401(k)s or profit-sharing soared from 11.2 million in 1975 to 85.3 million in 2020. In other words, people are now responsible for their own retirement planning and contributions from employers are not mandatory.
The time has come for automatic retirement accounts to be made available to all Americans.
U.S. Rep. Richard E. Neal (D-Mass.) has introduced the Automatic IRA (Individual Retirement Accounts) Act of 2024 that would require employers with more than 10 workers that don’t have a retirement plan to automatically enroll their employees in IRAs or other automatic contribution plans or arrangements, like 401Ks. Smaller employers would be eligible for a new auto IRA tax credit to fulfill this requirement.
D.C. Council member Christina Henderson (I-At Large) introduced the Automatic Retirement Savings Act of 2023 creating a program serving employees of small businesses that are unable to offer their workers retirement savings due to the cost and administrative burden of maintaining them.
Both bills need enactment so that senior Americans can live with a measure of financial security.
Reprinted from the Washington Informer
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