In this Sunday’s New York Times, Mark Miller writes about my alliance with Blackstone President Tony James to advocate for replacing 401(k)s with a mandatory retirement savings program.
Since I first proposed Guaranteed Retirement Accounts (GRA) in 2009, the effort for reform has gained steam as policymakers recognize the chasm between what experts recommend people save and what they actually do. Most Americans, even in the upper-middle class, have saved nowhere near enough for retirement.
The will for reform is present abroad and at home. Britain, Australia, and New Zealand have all implemented mandatory retirement programs of their own within the last generation to great success. In Britain, workers can expect to receive 71% of their salary in retirement. Three US states have enacted universal pension plans since 2012, and another 23 are considering a variety of proposals. State action is a response to federal inaction, and state policymakers would prefer federal reform.
Last month the US Treasury debuted its myRA program, which makes government-sponsored starter IRA’s widely available. But since myRAs are voluntary and small, most experts expect their impact will be limited. Nonetheless, they reflect a broad recognition of the need for reform. We need more alliances between academics and business leaders to bolster the case for federal retirement reform.