Preparing Americans for retirement is at the forefront of priorities for lawmakers and industry, as putting off saving for retirement for even a few years will shortchange employees in their golden years.

According to new data released by the Insured Retirement Institute, waiting to contribute 10% of an employee’s annual income until the age of 35 rather than 30 will result in an 11% decrease in annual retirement income of the course of a 25-year retirement span.

“When you consider that half the people that get up every day in going to work in America don’t have a retirement plan, that’s pretty perilous for the future of the country,” said Rep. Richard Neal (D-Mass.) Thursday in Washington, D.C., at the Champions of Retirement Security event hosted by IRI.

According to the study’s findings, the retirement savings “window,” the period of time over which one can realistically expect to save for retirement, has become ever shorter as young employees are entering the workforce later than before.  

Further details from the study show an employee putting off saving until age 35 would need to save more than 16% of their income each year to produce the same potential retirement income at age 65 as someone who started saving at the 10% rate beginning at age 30; waiting to start saving at age 40 would require putting aside more than 26% of income to keep up.

Still, industry experts are optimistic about the future direction of retirement savings, as Lynne Ford, executive vice president of Calvert Investment Distributors notes, “there has never been as much public policy as there is today.”

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While there are several bills in both the House and Senate to strengthen retirement security, Ford urges lawmakers not to do anything that will harm current policies to help Americans save for retirement.

“Anything that discourages savings will only exacerbate any current problems,” she says.

She points to some success in access to financial advisers to the low- and middle classes, as educated guidance in retirement saving has proven to do better for employees.

Additionally, she recommends five provisions that also promote a strengthened retirement, including:

  • Increased plan sponsor fiduciary clarity.
  • Annuity portability.
  • Making additional multiple employer plans available to start ups and small businesses.
  • A push on the Lifetime Income Disclosure Act.
  • Enhancements to auto enrollment and auto education programs.

Ford says in prioritizing the most important policy changes, further enhancements to the auto enroll and auto increase features would prove most valuable, but adds that getting fiduciaries and other lifetime income products in the retirement market would prove just as important.
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Creating fiduciary responsibility plans and “cracking the code” in plan portability will also play an important role in retirement savings, she says.

Still, in the end, David Reich, executive vice president at LPL Financial, says “it comes down to saving early and saving more for someone to retire with dignity.

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