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Thursday, April 18, 2024

American Workers Struggle for the Passage of the Retirement Savings for Americans Act

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From the heart of SALT LAKE CITY — The dream of⁣ retiring comfortably is ​becoming increasingly elusive⁤ for many Americans. The ⁣estimated‍ savings required for a comfortable retirement continues to climb each year,⁤ with the latest figure pegged⁤ at ‌a staggering $1.8 million, as per a survey conducted by Charles Schwab.

According to the survey, “While the required amount hasn’t seen a drastic ​increase, only 37% of workers are confident that they’ll be able to meet this target,​ a decrease of 10% from last​ year when the ‌figure was‍ $1.7 million.”

The retirement system in the U.S. heavily relies on individual ​responsibility for retirement savings. The sufficiency of retirement income is largely dependent on personal savings⁤ habits, investment decisions, and the availability of retirement plans through⁢ employment.

Recent data from the Economic ⁤Innovation Group revealed that in 2021, ⁤”A staggering 69 million —⁢ or 55.5% — of workers did⁤ not have any form of employer-provided ​retirement plan, a‍ group that is predominantly composed of low-income⁢ earners.”

The data also ‌highlighted​ the disparity ‌among‌ states in terms of access to employer-provided retirement plans.

Idaho emerged as the top‌ state, with 47% of its low-income workforce having access⁣ to an employer-provided retirement plan. In contrast, Florida lagged behind with only 23% of its low-income workforce having access to ⁤such plans.

In Utah, 30% of low-income‌ workers had access to an employer-provided retirement plan, but only 16% participated, leaving 260,134 low-income workers ⁤without any access.

Sen.⁤ Thom Tillis, R-N.C., stated ⁢in a press release, “Approximately 40 million ⁤Americans do not have ‍access to an ‌employer-sponsored​ retirement plan,⁤ posing a‍ significant hurdle to​ achieving⁢ financial‍ security for their retirement.”

Senators Tillis and John Hickenlooper, D-Colo., ​along with Reps, Lloyd Smucker, R-Pa., and ⁤Terri Sewell,⁤ D-Ala., reintroduced⁤ the Retirement Savings​ for ‌Americans Act to Congress last ​year after its ⁤initial introduction to the Senate in 2022.

Understanding the RSAA

The‍ Retirement Savings for Americans Act is a bipartisan bill aimed⁢ at enhancing⁢ retirement security and financial well-being ⁤for low- and middle-income American workers.

The act includes ⁣several key‍ provisions:

  • Eligibility and auto enrollment: ⁣The act targets full- and part-time⁤ workers who do not ⁢have access to an employer-sponsored retirement plan. These⁤ workers would be ⁣eligible for an account and automatically ⁢enrolled, with contributions‌ set at 3% of their income. They have the option to adjust this contribution rate or opt out entirely. Independent workers,‌ such as gig workers, are also included in this eligibility.
  • Federal contribution: To support low- ⁢and moderate-income workers, the act proposes ⁣a ⁣1% automatic contribution ⁤and up‌ to a 4% matching contribution via ⁢a refundable federal tax ⁢credit. ‌This benefit starts to decrease at median income levels.
  • Portability: One ⁢of the key benefits⁢ of the program is the portability‍ of the accounts. They remain with ​the workers throughout their careers, allowing them to stop and start contributions as needed.
  • Private assets: The accounts are the property of the worker, and the assets​ can be passed down to future generations, aiding in wealth and financial security⁣ building.
  • Investment options: The ⁣act provides a range of investment options similar to those ​in the current Thrift ⁤Savings Plan. These include low-fee‍ investment choices like lifecycle funds, which are aligned with the worker’s estimated retirement‍ date, and index funds composed of stocks ‍and‌ bonds.

“Americans who work hard their entire lives ‌deserve‌ to retire with dignity,” Hickenlooper said, as quoted by 401K Specialist. “This bill helps low-income ⁢workers enjoy a secure retirement and fulfill their American dream.”

RSAA ‍Gains Widespread Support

The act ⁢has received endorsements from various ‍sectors‌ and organizations, reflecting a bipartisan interest in improving the⁤ U.S. retirement savings⁣ system.

In October, ⁢Charles Schwab, ⁣the American multinational financial services company, expressed its strong support for the act.

“Creating‍ this⁢ kind of program meets an‍ obligation we all share to help every working American build financial security and ​well-being in retirement. I also know it will offset future support ‌we surely would have to ⁢provide if we don’t help more people begin to build that⁢ security today,” founder ‌and co-chairman Charles⁣ Schwab said ⁢in his support letter.

“And in ⁤true American spirit, ⁤it⁢ isn’t a giveaway, ‌but an⁤ incentive for working ‍individuals‍ to begin helping themselves and their families,” he added.

The American Association of Retired Persons, a prominent nonprofit and nonpartisan organization, is the latest to fully endorse⁢ the Retirement Savings for ‍Americans Act.

“Nearly ‌1 out ⁢of​ 4 ⁢Americans ⁣has no retirement savings, and more than half of all Americans report they are concerned they will not‌ achieve financial security in retirement. We​ know that Americans are much more likely⁤ to save when ⁣they have access to retirement savings options at work. Today, nearly half of all private-sector employees do⁢ not have access to⁤ an​ employer-sponsored ‍retirement⁤ savings program,” Bill Sweeney, senior vice president ​of government affairs⁤ at AARP, said in ‍the RSAA endorsement letter.

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1 COMMENT

  1. Agree – Finally, a much-needed measure to support the future financial stability of American workers! #RetirementSavingsAct

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