FOR IMMEDIATE RELEASE
July 20, 2004

CONTACT:
Shannon Hunt, 202.777.3512
Kevin Bruns, 202.777.3526
Tammy Gordon, 202.777.3530

Bipartisan Bill Promises “Paycheck for life” to Help Make Retirement More Secure

New Coalition Says Millions of Baby Boomers Likely To Suffer Declines In Their Standard of Living In Retirement

Washington – With the support of a broad-based coalition of women’s, farm, consumer, minority, insurance, business and taxpayer organizations, Representatives Nancy Johnson (R-CT), John Tanner (D-TN), Phil English (R-PA) and Stephanie Tubbs Jones (D-OH) introduced The Retirement Security for Life Act of 2004 (H.R. 4849), a bill that would give Americans more control over their retirement and empower them to receive a steady income for life.

In a news conference on Capitol Hill, coalition members and members of Congress called attention to the growing concern that large numbers of the nation’s 77 million baby boomers could suffer dramatic declines in their standard of living in retirement. The bill sponsors and their supporters said enactment of the legislation would encourage workers and retirees to turn to products like annuities that make steady payments for life.

Americans for Secure Retirement , a newly formed coalition, launched a new web site (www.paycheckforlife.org) and advertising campaign to educate Americans about the emerging retirement crisis and to drum up support for the legislation.

“For millions of women, even those who think they’re financially secure, the Golden Years could be a nightmare,” said Karen Kerrigan, president and CEO of the Small Business Survival Committee. “Women live longer and they often don’t realize, until it’s too late, that their resources won’t let them maintain their standard of living for the 25 or 30 years they may be retired. Women who are self-employed or consider the sweat equity in their businesses ‘their retirement’ are especially at risk.”

“There are two sides to retirement security,” said former Oklahoma Governor Frank Keating, president and CEO of the American Council of Life Insurers, a coalition member. “Having enough savings is critical, but that’s only half the battle. Retirees must manage their savings so they’ll still have a decent standard of living when they’re in their 90s or older. We must encourage people to choose retirement vehicles that pay a guaranteed paycheck for life.”

The Retirement Security for Life Act of 2004 provides a new tax incentive that would encourage retirees to choose retirement vehicles, such as annuities, that provide guaranteed lifetime income. Under the proposal, individuals would not pay federal taxes on one-half of the income generated

by annuities that promise lifetime payments. There would be an annual limit of $20,000 on the amount an individual could exclude from federal taxes each year. For a typical American in the 25% tax bracket, this would provide an annual tax savings of up to $5,000.

“Americans underestimate the amount of time they will live in retirement,” said C. Robert Henrikson, president and chief operating officer of MetLife. “Retirement is often viewed as the ‘finish line,’ but it's really the beginning of a very different kind of race -- one of unknown duration. We're here today to give Americans the best possible odds for a victory lap. Lifetime payout annuities are the only retirement tool available that enable us to manage some of the most significant financial risks we'll face during our retirement.”

“Retirees who receive guaranteed lifetime income lead remarkably different lives,” said David Senter, spokesperson for the American Corn Growers Association. “They have a better standard of living, even when they’re in their 90s. They live more independent lives and avoid becoming a burden on their families or others. They have peace of mind.”

Several significant economic and demographic shifts are putting the retirement security of most Americans at risk. These shifts include the following:

• Americans are living longer. Life expectancy of a 65-year-old is close to age 83, four years longer than in 1960. One of three 65-year-old women today is expected to live into her 90s. About half of all retirees will live beyond average life expectancy.
• The coming retirement of the nation’s 77 million baby boomers will double the number of retirees in the Social Security program. Even today this program replaces a small fraction of earnings for most workers, a fraction that is expected to decline further.
• Fewer retirees in the future will enjoy the security and regularity of monthly pension checks that many employers once paid. Thirty years ago, 40 percent of workers had traditional pensions; that portion today is 21 percent and dropping.

Groups who traditionally have not had access to adequate pension coverage are especially at risk. They include women, farmers, the self-employed, part-time workers, employees of small firms and minorities, many of whom are middle-income. According to Census Bureau data, about 60 percent of workers with household incomes of less than $50,000 lack pension coverage.

Members of the coalition include a growing list of diverse organizations, including the following: American Agriculture Movement of Arkansas, American Agri-Women, American Corn Growers Association, American Council of Life Insurers, Citizens Against Government Waste, Committee of Annuity Insurers, Financial Services Roundtable, Hispanic Business Roundtable, National Association for Variable Annuities, National Consumers League, National Taxpayers Union, Small Business Survival Committee, Soybean Producers of America, The Latino Coalition, U.S. Chamber of Commerce, Women Entrepreneurs, Inc., and Women’s Institute for a Secure Retirement.

For more information on Americans for Secure Retirement, visit www.paycheckforlife.org.

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