Senate Special Committee on Aging Discusses the Changing Retirement Landscape
AT SEPTEMBER 25TH’S SENATE SPECIAL COMMITTEE ON AGING HEARING, lawmakers and panelists discussed retirement security in America and how it has changed. In his opening statement, Chairman Bill Nelson (D-Fla.) said that changes in the retirement system, higher costs of health care, and the recent recession have all combined to put baby boomers on a “shakier financial footing” than previous generations.
In her opening statement, Ranking Member Susan Collins (R-Maine) said “far too many American seniors struggle to get by” and said she is interested in hearing proposals to incentivize small businesses to offer retirement plans, as long as the proposals do not include “costly mandates.”
Testimony
Witnesses at the hearing included: Joanne Jacobson, an American senior; Olivia Mitchell, International Foundation of Employee Benefit Plans Professor at the Wharton School at the University of Pennsylvania; Paula Calimafde, Chair at the Small Business Council of America (SBCA); and Richard Johnson, Senior Fellow and Director, Program on Retirement Policy at the Urban Institute.
In her testimony, Mitchell highlighted the growing debt of baby boomers including housing and mortgage debt, credit card debt, and debt arising from higher medical expenses and the cost of health care. Mitchell noted that baby boomers could benefit from financial education and delaying Social Security benefits.
Calimafde said in her testimony that encouraging Americans to save inside of retirement plans is important, and noted that, according to data from the Employee Benefit Research Institute (EBRI), individuals are 14 times more likely to save through an employer-sponsored plan than an individual retirement account (IRA). She offered automatic enrollment and automatic escalation features as potential ways to increase savings.
Johnson noted in his statement that research from the Urban Institute’s Program on Retirement Policy found that inflation-adjusted retirement incomes are projected to rise in the coming decades; however, the standards of living will fall. Johnson said it is critical to ensure the health of the Social Security system.
Questions
During the question and answer portion of the hearing, Collins asked if seniors understand the benefits created by delaying Social Security benefits by even a few years. Mitchell replied that the Social Security Administration could improve their education of seniors regarding delaying benefits.
Collins asked what change could be enacted to encourage small businesses to offer plans. Calimafde encouraged policymakers to keep the current tax incentives for retirement plans and support the current contribution limits, rather than decrease them.
Sen. Elizabeth Warren (D-Mass.) noted that employer-sponsored retirement plans help people “retire with dignity,” but said few small businesses offer plans and cited high administrative costs as a deterrent for small business owners. Calimafde disagreed that small businesses are not offering plans, noting a Small Business Administration study that found of small businesses with 25-50 employees, 60 percent offered a retirement plan.
Warren mentioned the new fee disclosure requirements recently implemented by the Department of Labor (DOL) and asked if simplification would make a real difference for small businesses looking to start a plan. Mitchell agreed that simplification is usually a good thing, and said tax law has shaped the retirement landscape.
Sen. Tim Scott (R-S.C.) asked about the simplification process for small businesses and Calimafde replied that a “30 second sound bite” or one page document goes farther with small business owners than an onerous document of information. She added it is important that small businesses have access to investment advice.
Sen. Joe Manchin (D-W. Va.) said there are 15 different agencies with financial literacy programs, each spending millions of dollars, but added there is no progress being made. He asked if the agencies’ efforts could be streamlined. Calimafde replied that before deciding to consolidate efforts, research needs to be done to see what kind of information they are providing, who needs that information, and who would be the leading authority to provide that information.
In his closing statement, Nelson said each part of the “three legged stool” which includes Social Security, private savings like IRAs, and savings in plans such as 401(k) plans, were each very important for the retirement security of Americans.
More information, including links to witness testimony and a webcast of the hearing, can be found here.
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AT SEPTEMBER 25TH’S SENATE SPECIAL COMMITTEE ON AGING HEARING, lawmakers and panelists discussed retirement security in America and how it has changed. In his opening statement, Chairman Bill Nelson (D-Fla.) said that changes in the retirement system, higher costs of health care, and the recent recession have all combined to put baby boomers on a “shakier financial footing” than previous generations.
In her opening statement, Ranking Member Susan Collins (R-Maine) said “far too many American seniors struggle to get by” and said she is interested in hearing proposals to incentivize small businesses to offer retirement plans, as long as the proposals do not include “costly mandates.”
Testimony
Witnesses at the hearing included: Joanne Jacobson, an American senior; Olivia Mitchell, International Foundation of Employee Benefit Plans Professor at the Wharton School at the University of Pennsylvania; Paula Calimafde, Chair at the Small Business Council of America (SBCA); and Richard Johnson, Senior Fellow and Director, Program on Retirement Policy at the Urban Institute.
In her testimony, Mitchell highlighted the growing debt of baby boomers including housing and mortgage debt, credit card debt, and debt arising from higher medical expenses and the cost of health care. Mitchell noted that baby boomers could benefit from financial education and delaying Social Security benefits.
Calimafde said in her testimony that encouraging Americans to save inside of retirement plans is important, and noted that, according to data from the Employee Benefit Research Institute (EBRI), individuals are 14 times more likely to save through an employer-sponsored plan than an individual retirement account (IRA). She offered automatic enrollment and automatic escalation features as potential ways to increase savings.
Johnson noted in his statement that research from the Urban Institute’s Program on Retirement Policy found that inflation-adjusted retirement incomes are projected to rise in the coming decades; however, the standards of living will fall. Johnson said it is critical to ensure the health of the Social Security system.
Questions
During the question and answer portion of the hearing, Collins asked if seniors understand the benefits created by delaying Social Security benefits by even a few years. Mitchell replied that the Social Security Administration could improve their education of seniors regarding delaying benefits.
Collins asked what change could be enacted to encourage small businesses to offer plans. Calimafde encouraged policymakers to keep the current tax incentives for retirement plans and support the current contribution limits, rather than decrease them.
Sen. Elizabeth Warren (D-Mass.) noted that employer-sponsored retirement plans help people “retire with dignity,” but said few small businesses offer plans and cited high administrative costs as a deterrent for small business owners. Calimafde disagreed that small businesses are not offering plans, noting a Small Business Administration study that found of small businesses with 25-50 employees, 60 percent offered a retirement plan.
Warren mentioned the new fee disclosure requirements recently implemented by the Department of Labor (DOL) and asked if simplification would make a real difference for small businesses looking to start a plan. Mitchell agreed that simplification is usually a good thing, and said tax law has shaped the retirement landscape.
Sen. Tim Scott (R-S.C.) asked about the simplification process for small businesses and Calimafde replied that a “30 second sound bite” or one page document goes farther with small business owners than an onerous document of information. She added it is important that small businesses have access to investment advice.
Sen. Joe Manchin (D-W. Va.) said there are 15 different agencies with financial literacy programs, each spending millions of dollars, but added there is no progress being made. He asked if the agencies’ efforts could be streamlined. Calimafde replied that before deciding to consolidate efforts, research needs to be done to see what kind of information they are providing, who needs that information, and who would be the leading authority to provide that information.
In his closing statement, Nelson said each part of the “three legged stool” which includes Social Security, private savings like IRAs, and savings in plans such as 401(k) plans, were each very important for the retirement security of Americans.
More information, including links to witness testimony and a webcast of the hearing, can be found here.