My first year as CEO of a Washington, D.C. trade association has been quite an experience. Like many other “outsiders” who come to D.C., I thought a good dose of business experience would contribute some real-world, common-sense into the chaotic political scene in Washington.
When I was an executive at two major insurance companies, my performance was judged on results. I think many Americans today are frustrated by the partisan acrimony in Washington, D.C. and believe that government should be run more like a business and held more accountable based on results.
Our industry has worked hard for years to lay the foundation and build the policy case to expand retirement saving opportunities for millions more American workers through increased availability of workplace retirement plans. I was encouraged and highly optimistic earlier this year when the House of Representatives acted quickly to advance comprehensive private sector retirement security legislation.
By May, the House passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act by a whopping 417-3 bipartisan vote and we expected that the Senate would quickly follow. Hard work driving action and achieving solid results — just like the business world.
Unfortunately, the bill stalled in the Senate over the objections of a handful of senators blocking it from a quick visit to the floor. So here we sit and wait while a retirement crisis continues to fester and a real solution languishes lying just beyond our grasp.
IRI research shows that Baby Boomers, Gen Xers and Millennials all face retirement savings challenges, and one of the biggest fears among those approaching or in their golden years is running out of money.
Every day between now and the year 2030, 10,000 people will reach age 65 and many of these retirees will live 20-30 years or longer in retirement, increasing the risk of outliving retirement assets because of longer lifespans.
In the business world, we would take “yes” for an answer when we had a solution in hand with broad agreement that could address a significant problem. One change alone in the SECURE Act will create between 600,000 and 700,000 new retirement accounts by allowing small businesses to pool together to offer a plan to their workers while sharing the administrative costs.
More access to annuity products, which offer a guaranteed lifetime income, could allay fears of outliving retirement savings because too few workplace retirement plans offer them due to bureaucratic roadblocks. The SECURE Act fixes that to help millions of retirees feel more confident in their financial security.
The bill also raises the age at which people are required to take withdrawals from Individual Retirement Accounts (IRA) and eliminates the age cap for contributing to IRAs. This allows those who choose to continue working to continue saving without forcing them to withdraw money before they need it. As our nation ages and the prospect of more Americans reaching 90 years old or older grows, we need policies to allow workers to save more money for longer retirements.
The legislation also will address other important issues, like a glitch in the tax code that penalizes 18,000 beneficiaries of fallen military service members. These Gold Star families of heroes killed in action defending our nation shouldn’t be hit with an unfair tax on their survivor benefits. The SECURE Act fixes that.
The Act benefits an estimated 500,000 volunteer firefighters and EMTs by eliminating a tax on incentives they may receive from the communities they serve in these potentially life-threatening jobs. It includes protections for more than 4 million workers nationwide in private sector pension plans who are now at risk of losing future benefits; and 1,400 religiously affiliated organizations nationwide, who are at risk of not having access to their defined contribution plans.
Finally, passing the SECURE Act might show all Americans that despite the partisan rancor of the day, Congress can deliver much-needed solutions. The SECURE Act can address serious concerns for American workers who someday hope to achieve a financially secure retirement. Bipartisan support exists to pass it. It’s time we take “yes” for an answer and get this done now.
Wayne Chopus is President and CEO of the Insured Retirement Institute.
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