couragement that entice individuals to save for retirement can come in a variety of forms. Offerings such as company matches, stock savings investment plans and formal education at the workplace can help people make the decision to invest.
Tax incentives is another such idea and at a recent forum on retirement savings, the United States Chamber of Commerce (USCC) and the American Association of Retired Persons (AARP), came together to encourage law makers to expand tax incentives on retirement saving plans.
“With the unprecedented growth in the number of Americans who are at or near retirement age, it is clear that an emphasis on increasing retirement savings will not only contribute to individual retirement security but also to America's economic security,” says Randy Johnson, the USCC's Senior Vice President of Labor, Immigration and Employee Benefits.
At the event, AARP and the USCC stressed that millions of Americans have either no retirement savings at all or have far less than they will need for a comfortable retirement. There are many contributing factors to this issue including: lack of access to or non-participation in an employer-provided retirement plan, lack of education about the need for individual retirement saving, or underestimating the amount needed to reach their retirement goals.
“Unless we reverse current trends, the majority of Americans will face a grim future in retirement,” explains Debra Whitman, AARP Executive Vice President for Policy, Strategy and International Affairs. “That is why we are calling…for expanding access for workers to save for retirement and for improving the tax incentives that help encourage them to save.”
The two organizations are pushing for the following actionable items:
- Expand access for workers to tax-deferred payroll deduction retirement saving plans at their workplace, while recognizing and minimizing any additional burden these plans place on employers.
- Keep and enhance incentives to save for individuals at all income levels while targeting in particular those low- and moderate-income earners who have fewer opportunities and resources to save.
- Increase education efforts regarding the need for working Americans to save sufficient amounts for retirement and how to most effectively do so.
Both AARP and the USCC say payroll deduction retirement saving, especially when combined with automatic enrollment and automatic escalation, has proven to be the most efficient and effective method to increase participation and retirement savings.
Joel Kranc is Director of Kranc Communications, focusing on business communications, content delivery and marketing strategies. He has written and worked in the retirement and institutional investment space for 17 years covering North American markets, large institutional pensions and the adviser community.
