President's retirement savings proposals are little-noticed gems

Written by Dory Rand on February 26, 2009 - 4:49pm

Currently about half of all workers lack workplace pensions or retirement plans. Among the President’s many bold ideas outlined in his recent address to Congress and 2010 budget are two little-noticed proposals for helping people build retirement security.

In his Feb. 25 address to Congress, President Obama stated that “to preserve our long-term fiscal health, we must also address the growing cost in …Social Security…while creating tax-free universal savings accounts for all Americans.” In the proposed 2010 budget, the President outlines two ways to help more Americans save for retirement: by “automatically enroll[ling workers] in workplace pension plans,” with the right to opt out; and, by requiring employers who do not offer a retirement plan to “enroll their employees in a direct-deposit IRA account that is compatible with existing direct-deposit payroll systems.”

In addition, the Budget proposes to expand retirement savings incentives for working families by modifying the existing Saver’s Credit to provide a 50-percent match on the first $1,000 of retirement savings for families that earn less than $65,000. The credit would be fully refundable to ensure that savings incentives are fair to all workers.

These proposals would go a long way towards increasing both the number of workers who save for retirement and the amount of personal savings that workers accumulate to supplement Social Security.
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