The way Americans work and live is changing, but policy
around how we save for retirement will not keep pace if the U.S. Senate isn’t
able to act on legislation that passed the House in May.
The bipartisan bill — aptly named the Secure Act — expands
access to retirement plans for millions of workers. It also allows older
workers and retirees to contribute more to their IRAs, increases 401(k) coverage
to part-time employees, and helps new parents, including adoptive parents,
better manage expenses.
That’s not all. The Secure Act corrects recent inadvertent
increases in the taxes Gold Star Families pay on survivor benefits. It prevents
benefits cuts to older, longer-service workers in defined benefit pension
plans. And it protects defined contribution plans at religiously affiliated
organizations.
But it’s not just the sheer number of workers this
legislation impacts that makes it significant. It’s who these workers are and
how the legislation increases access to them that matters. It’s exactly the
kind of good public policy that addresses the issues raised at kitchen tables
across America.
For starters, Americans are living longer. Each day, 10,000
Americans turn age 65 and many can expect to live 20 years or longer in
retirement. Yet, almost a quarter of adults say they have no retirement
savings. Many who will rely solely on Social Security are at risk of living
their retirement years — perhaps two or three decades — with a very different
lifestyle than they may be accustomed.
Meanwhile, there are generations of workers who are still in
the middle of their earning years who have a lot of preparing to do, yet lack
access to a workplace retirement plan.
Some estimates show there are as many as 16 million workers
in the gig economy. Many of these independent contractors work for small
employers who lack the resources to offer 401(k)s and IRAs to their employees
on their own, despite their desire to.
These small businesses can play a critical role in closing
the retirement savings gap as they employ more women, Asian American, American
Indian and Hispanic workers than larger employers. These communities are more
at risk for not having enough retirement savings. Yet, small employers are also
less likely to offer a workplace retirement savings plan.
Over two-thirds of part-time workers either work for an
employer without a defined contribution plan or are not eligible for their
employer’s plan. They face unique savings challenges. This is particularly true
for women, who make up 64 percent of part-time employees in the United States,
and consistently lag behind in retirement savings.
Retirement security is a complex issue, but the access gaps
are clear. The Secure Act looks where the gaps are — with small employers, with
part-time workers, with middle-income earners — and makes direct efforts to
close the coverage gaps.
Fundamentally, we know workplace savings vehicles are one of
the best motivators to get people to save for retirement. This is especially
true for middle income earners. People earning $30,000 and $50,000 per year are
16 times more likely to save for retirement if they have access to a workplace
plan.
Put simply, low- and middle-income Americans struggling to
save for retirement lose if the U.S. Senate fails to pass the Secure Act.
There’s no time to wait — the time is now.
Susan K. Neely is the President and CEO of the American Council of Life Insurers (ACLI), the nation’s leading trade association determined to help families live better lives by achieving financial security and certainty. As president and CEO, Neely drives public policy and advocacy on behalf of ACLI’s member companies that represent 93 percent of industry assets and serve 90 million families.