Bipartisan Congressional News
FOR IMMEDIATE RELEASE
February 15, 2005

Lawmakers Introduce Bipartisan Retirement Security for Life Act
Legislation Aims to Give Retirees a Guaranteed "Paycheck for Life"

WASHINGTON , DC – A bipartisan group of House and Senate lawmakers introduced legislation today that is designed to help Americans secure their retirement with a guaranteed "paycheck for life" through investment in life annuities. Sponsors of the respective bills include Senators Gordon Smith (R-OR) and Kent Conrad (D-ND) and U.S. Representatives Nancy Johnson (R-CT) and John Tanner (D-TN).

The Retirement Security for Life Act provides a tax incentive, available to all retirees, when they elect to receive a guaranteed stream of income for life from their annuity. The bill would waive federal taxes on half of the income generated by the annuity, up to a maximum of $20,000 annually. For the typical retiree, it would provide a tax break of up to $5,000. The bill is designed to help Americans who have savings maintain their pre-retirement standard of living.

The sponsors of the Act said that there is a great need to provide retirees the tools necessary to manage their assets in retirement. Annuities, which guarantee a monthly payment for the life of the investor, are one such tool.

“We’re going to have big challenges in the coming years as more Americans retire,” said Smith. “We need to be looking at ways to help people plan for their futures. Providing tax incentives for annuities is one of the easiest and most effective things we can do.”

“Aging Americans face a major challenge in managing their savings to ensure a secure, stable retirement. Unprecedented numbers of Americans now live into their 90s,” said Senator Kent Conrad (D-ND). “In my home state of North Dakota there is an acute need for retirement vehicles that will provide a secure retirement. We have many farmers, for example, that need to make the proceeds from the sale of their farm last the rest of their lives.”

" America's retirees deserve the security and peace-of-mind of knowing that they will not outlive their savings," said U.S. Rep. Nancy Johnson, the bill's lead House sponsor. "We must give Americans the tools to secure a stream of income during their retirement and maintain their quality of life. This bipartisan legislation will give Americans greater incentive to secure for themselves and their family a 'paycheck for life.'"

Research indicates that many future retirees, including an estimated 77 million Baby Boomers, will have difficulty maintaining an adequate standard of living. By providing incentives, the Retirement Security for Life Act will encourage Americans to invest in their own retirement. The periodic payments from a life annuity would guarantee income throughout retirement as a complement to Social Security and pension benefits.

“This is a basic ‘kitchen table’ issue,” said David Senter, legislative director for the American Corn Growers Association. “Social Security covers less and less of people’s income needs in retirement. On top of that, thousands of American farmers and their families don’t participate in pension plans or have other means of guaranteeing retirement income. As a result, it is critical that Congress help arm Americans with the tools they need to better manage their individual retirement savings.” 

A life annuity provides beneficiaries with guaranteed life-long monthly payments. After-tax dollars , such as the proceeds from the sale of a house or small business, can be used to purchase the annuity. Income from employer-sponsored plans that already enjoy a tax advantage, such as IRAs or 401(k)s, is not eligible.

"We need to help Americans not only plan for financial security but also help people manage their savings for a lifetime," said U.S. Rep. John Tanner (D-TN). "That peace of mind can help families look forward to comfortable quality of life throughout their retirement years."

In addition to the lead sponsors, key cosponsors of the bill include Olympia Snowe (R-ME), and Hillary Clinton (D-NY) in the Senate, and Phil English (R-PA), and Stephanie Tubbs Jones (D-OH) in the House.

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