The report “identifies barriers to retirement savings confronting low-income workers, small business employees, new entrants to the workforce and individuals nearing retirement” as well as “worked on action plans for target populations to raise awareness about retirement planning and offer new programs, policies and ideas to help them adequately save for retirement.”
One of the ideas was to “reduce current legal restrictions that limit companies’ ability to bundle products such as annuities and long term care insurance.” According to the report, “This would allow the financial services industry to design unified plans that not only provide for retirement savings, but also cover the rapidly rising health costs that may threaten those savings.”
Other ideas included:
- A Retirment Income Security Plan - The program would support workers who continue to work past age 65 by permitting them to phase in retirement income withdrawals, rather than requiring them make mandatory minimum withdrawals.
- Low-income workers are encouraged to take retirement income in the form of lifetime annuities by taxing lifetime annuity and pension distributions at the capital gains rate, rather than at the higher rate imposed on ordinary income.
- For low-income workers the report suggested excluding retirement savings accounts and 401(k) plan assets from eligibility requirements for food stamps and other welfare benefits.
The assumption being made by all of these “ideas” is that many
people actually have savings, insurance or investment vehicles to build their retirement nest eggs. While I for one am ecstatic that a summit was even held addressing retirement planning issues, the focus is in the wrong area. I have spoken with, helped, educated and generally been around the “average” person that knows nothing to a little about saving and investing. Most people still do not know what a mutual fund is and how that simple product could help them retire more comfortably. The fact that traditional pension plans have been largely replaced with 401(k)’s and other retirement plans and therefore a shifting of the responsibility from the employer to the employee a new strategy needs to be put in place in order to educate people about retirement.
I will write future blog posts on this topic and stop now before this entry gets too long.
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