It’s Time to Take the Risk Out of Retirement
Amidst the deluge of polls, electoral counts, and predictions for yesterday’s election, a different number was released that shows the grim state of Americans’ retirement security. According to a new report from the Center for Retirement Research, the National Retirement Risk Index jumped to 53 percent in 2010, meaning that more than half of U.S. households are at risk of not being able to maintain their standard of living in retirement. That's an increase of nine percent -- from a 44 percent risk in 2007. Other equally gloomy statistics were included in a front-page article in yesterday's Washington Post on "The Distant Dream of Retirement."
Fortunately, a growing number of policymakers are taking steps to take the risk out of retirement. Earlier this year, Massachusetts became the first state to implement a state-administered retirement plan for nonprofit employees. More recently, California enacted legislation that will allow the state to administer a new retirement program for private-sector workers whose employers don’t already offer a retirement plan. Across the Atlantic, the United Kingdom began implementing a new nationwide retirement program. And here at home, there is growing support for a comprehensive proposal put forward by Senator Tom Harkin. Pensions & Investments heralded the proposal as "a hit," and in an online P&I poll, 73 percent said that they supported the concept.
During this campaign season, the topic of retirement security was largely overlooked, even though it is a high-priority issue for most people. With the election behind us, it’s time for more lawmakers, both here and abroad, to start paying greater attention to this important issue.
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Did You Know?
A 401(k) plan is a retirement savings plan in which the benefit is based on contributions to an individual account and the investment return on those contributions. Typically, employees make contributions to the plan and, in many cases, employers match the employees' contributions. These plans are called defined contribution plans. In most 401(k) and other retirement savings plans, the employee is responsible for choosing among the investments offered by the plan. Other types of retirement savings plans are 403(b) and 457 plans.