Leaders and witnesses at a Senate Special Committee on Aging hearing Wednesday had suggestions for addressing what the committee called “a retirement crisis” — the fact that most Americans may not have enough savings to cover their expenses when they stop working.
“We are on the verge of a national crisis,” said Sen. Susan Collins (R-ME), chairman of the committee. The situation, she added, was brought on in part by employers changing from providing “defined benefit” plans such as pensions to offering “defined contribution” plans such as 401(k)s, putting the onus on workers to save. Other factors, Collins said, include more Americans working for small companies that don’t offer retirement savings plans and many older adults relying on Social Security to cover their monthly expenses in retirement.
Collins said she introduced two bills on Monday to help address related issues. One, the AARP-endorsed SIMPLE Plan Modernization Act, introduced with Sen. Mark Warner (D-VA), is designed to provide greater flexibility and access to small businesses and their employees seeking to use SIMPLE plans as an option for saving for retirement, she said.
The other, known as the Retirement Security Act and introduced with Sen. Maggie Hassan (D-NH), has the goal of helping small businesses offer retirement plans to their employees and encourage individuals to increase their savings for retirement, Collins said.
Sen. Bob Casey (D-PA), the committee’s ranking member, said he, with committee members Sens. Richard Blumenthal (D-NY) and Kirsten Gillibrand (D-NY) and others, is introducing the Surviving Widow Income Fair Treatment Act in an effort to increase Social Security benefits for women by eliminating some claiming rules and caps that that he said substantially reduce a widow’s benefits.
In addition to strengthening Social Security, the senator said, other efforts that Congress can undertake to improve retirement security include keeping multiemployer pensions solvent, expanding access to workplace retirement plans and creating tax incentives, such as the Saver’s Credit, for retirement savings.
Hearing witness Gene L. Dodaro, U.S. comptroller general, reiterated five policy goals suggested in a 2017 Government Accountability Office report on retirement security: promoting universal access to a retirement savings vehicle, ensuring greater retirement income adequacy, improving options for the spend down phase of retirement, reducing complexity and risk for both participants and plan sponsors, and stabilizing fiscal exposure to the federal government.
Dodaro also reiterated the GAO’s previous recommendation that “Congress consider establishing an independent commission to comprehensively examine the U.S. retirement system and make recommendations to clarify key policy goals for the system and improve the nation’s approach to promoting more stable retirement security.”
The commission, he said, should include representatives from government agencies, employers, the financial services industry, unions, participant advocates and researchers, among others.
Watch the hearing and read other witness testimony on the committee’s website.