I spoke with The New York Times’s Noam Scheiber about the retirement savings initiatives in President Obama’s 2017 budget proposal. They are an admirable attempt to make up for the long decline in employer-provided retirement benefits, but don’t go far enough.
American workers are facing a retirement crisis. Experts recommend we have at least eight times our salary in savings by the time we retire. But the median account balance among families on the verge of retirement is only $12,000. Few have even close to enough savings. Many have none at all.
President Obama’s 2017 budget proposal includes a few modest attempts at improving working Americans’ ability to save for retirement. One is the “auto-IRA,” which would that require all companies who don’t offer a retirement plan enroll their workers in an IRA. Another is a proposal to make it easier for small businesses to join together and offer their employees pooled 401(k) plans at a lower cost than if they purchased them on their own.
These are notable attempts at reform, but will not solve the retirement crisis even if they make it through Congress. My proposal calls for Guaranteed Retirement Accounts, managed by the Social Security Administration, to which employers and employees would split a mandated 3% of their income and which would generate a guaranteed rate of return. This is the best way to ensure all Americans can enjoy a comfortable and secure retirement.