Obama’s Retirement Security Proposals Slammed By Advocates As Far Too Little
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Retirement security experts parsing President Obama’s State of The Union speech and his follow-up address Wednesday on retirement policy at a U.S. Steel plant are frustrated that the White House is proposing to do too little for America’s oldest generations—whose savings fall trillions short of what’s needed to maintain their current living standards.
In Tuesday evening’s State of The Union, President Obama announced that the Treasury Department would expand the U.S. Savings Bond program to allow people to create their own retirement accounts—called MyRA—for up to $15,000 in post-tax income. The executive branch initiative was part of Obama’s larger call to help the middle class.
“And if this Congress wants to help, work with me to to fix an upside-down tax code that gives big tax breaks to help the wealthy save, but does little to nothing for middle-class Americans,” the President said, saying everyone should have access to “an automatic IRA on the job, so they can save at work just like everyone in this chamber can.”
On Wednesday, in Pittsburgh, Obama expanded his remarks in an address that the White House promoted as a retirement policy speech. Obama, addressing unionized U.S. Steel workers at their Pittsburgh plant, said the goal was fourfold: creating new jobs, investing more in training and education, and making “sure that hard work pays off.” He ended his remarks, saying, “This is the opportunity agenda that’s going to restore some sense of economic security in this 21 st century economy.”
There are 75 million Americans without access to workplace savings programs, White House officials said this week, emphasizing that this U.S. Treasury Department version of a Roth IRA—where after-tax income is invested—was a good first step for them.
But liberal retirement security experts have spent the week trying to put the best face on what’s at best a disappointment because Obama did not even mention the big picture—that the financial floor provided by Social Security has been shrinking compared to rising costs of living since the mid-1980s, to say nothing of the aging baby boom generation’s inadequate retirement savings. That’s because most people lack pensions (deferred paydays) and private 401K plans haven’t filled in that gap in most cases.
“It’s not plausible that Social Security is going to provide an adequate retirement for people earning the median or higher any time soon,” said Dean Baker, Co-Director, Center for Economic and Policy Research. “If we oppose measures that can make it easier for these people to save and reduce their costs, then we are telling these people we don’t want them to have enough on which to retire. I can’t see any reason not to support something like this and then try to take away the $15,000 cap.”
The big fear among many of the policy advocates who have been trying to get Congress to reframe the retirement security debate is that Obama’s MyRA proposal may give the White House political cover for doing nothing substantive.
“In the context of an administration that has been tone death on Social Security and a Congress, especially the Republicans, who have been worse, the MyRA proposal, automatic IRA proposals, strike me as distractions from the real issues,” said Syracuse University Professor of Social Work Eric Kingson, who also is co-director of Social Security Works, the national coalition calling for expanding Social Security.
The President did not discuss the real problems and possible solutions for a nationwide crisis where tens of millions of people will slip toward poverty, he said. The upcoming generation of retirees will need at least $6.6 trillion dollars more than they now have saved, a new estimate by Boston College’s Center for Retirement Research found.