FOR IMMEDIATE
RELEASE
January 13, 2005
Coalition Urges Congress to Make New Year's Resolution to Get America Retirement Ready
Now that the cork has popped, the champagne flowed and 2005 is upon us, many Americans have steadfastly made their New Years resolutions. For those who have vowed to do a better job of saving for their eventual retirement, it may be welcome news that high on the list of resolutions for the Bush Administration and Congress this year is retirement reform.
Most Americans know that they must save for retirement,
but give very little thought to how they might make those savings last the
expected
Retirement security is an issue that needs immediate attention. The first of the 77 million baby boomers begin to retire in just a few years. Millions of Americans are at risk of a drastic reduction in their standard of living, with a majority not participating in an employer-based retirement program1 and Social Security today only covering 42% of earnings.2
Annuitization, the idea of steady payments over a lifetime, has been long been a central principle of retirement policy and practice in this country. Social Security, since its inception, has provided steady payments to retirees. And, traditional corporate pension programs, or defined benefit plans, have long provided participants with a steady income throughout their retirement years.
But two things have changed that should make annuitization a
big part of the looming retirement security debate. First, there has been a
gradual and significant decline in the percentage of Americans covered by
defined benefit plans. Between 1985 and 2000, the percentage of Americans
participating in defined benefit plans dropped from 80% in 1985 to 36% in
2000.3 The corresponding shift to defined contribution plans requires
many Americans to manage their savings on their own, and takes away the
traditional automatic security of a steady income for life.
The second important change is the replacement rate of Social Security also has declined2, meaning that beneficiaries receive a smaller portion of their pre-retirement income in benefits than in the past.
Taken together, these changes mean that the huge baby boom
generation will retire with proportionately less income guaranteed through
retirement vehicles that annuitize benefits compared with their parents.
Americans for Secure Retirement, a coalition of
more than 20 groups concerned with retirement security, has come up with one
solution to this retirement security challenge. The coalition supports a new tax incentive for individuals that would encourage
investments made with after tax dollars in annuity products that make guaranteed
payments for life. The proposal would give all Americans, including those who
don't have access to employer-based retirement programs, an opportunity to make
their retirements more secure by getting a steady paycheck for life
To investigate this new angle in the retirement crisis, find out if your retirement savings will last long enough or learn more about Americans for Secure Retirement, visit www.paycheckforlife.org.
Media Contact:
Tammy Gordon
Americans for Secure Retirement
(202)
777-3530
1 Employee Benefit Research Institute Estimates from the 2004
March Current Population Survey
2 Social Security Administration, Link: www.ssa.gov/kc/fact_sheet_14
3 U.S. Department of
Labor, Link: www.bls.gov/opub/cwc/cm20030325
