There are 30 million Baby Boomers at risk of not having enough retirement income, which experts say is leading toward a retirement crisis in the United States.
The gloomy picture includes the challenge of funding longer life spans, having more older citizens living below the poverty line, and seeing many people forced into working retirements to replace disappearing pension benefits.
Coupled with the 10,000 Americans that are reaching retirement age every day through at least 2030, when almost 73 million people will be age 65 and older, “the importance of protecting and enhancing retirement savings has never been greater,” said Cathy Weatherford, president and CEO of the Insured Retirement Institute (IRI), the Washington, D.C.-based nonprofit association representing the retirement income industry.
Not only are many Americans miscalculating how long their retirement savings need to last, she said, but many also risk spending their retirement years in financial stress, which could be “exacerbated by increased post-retirement health and long-term care costs and by reduced buying power due to inflation.”
So as federal lawmakers consider a new tax plan, it is vital for tax reform to “protect existing tax treatment and tax-deferred savings incentives that spur retirement savings and economic growth,” Weatherford said.
Such incentives, Weatherford wrote in a letter sent to President Donald Trump and congressional members in both the Senate and House this week, play a key role in producing $25 trillion in retirement assets, accounting for 34 percent of all household assets in the United States.
Likewise, these assets are heavily invested in U.S. equities and bonds and make other contributions that are important to the nation’s economic growth, she wrote.
Policymakers should enact several bipartisan provisions supported by IRI that “entail little revenue cost,” Weatherford said.
These include protecting retirement savers by maintaining different types and structures of retirement plans, such as 401(k), 403(b) and 457(f) plans, which are tailored for employees in the private, government, church, education and nonprofit sectors, and “carefully, cautiously” evaluating options, such as expanding Roth accounts.
Weatherford also said that in considering tax reform, policymakers should “strongly consider enacting” enhancements that would include simplified, streamlined notifications and disclosures and more uniform distribution rules regarding qualified retirement plans.
“IRI supports repealing current restrictions on life insurance company affiliated groups, putting them on equal footing with non-insurance groups, which are not subject to the same consolidated return restrictions,” she said
Read the IRI letter in its entirety here.