CAP Senior Fellow David Madland delivers remarks for testimony before the Maryland Joint Committee on Pensions. Read the full testimony (CAP Action).
Thank you for inviting me here today to discuss how to improve retirement savings in Maryland.
My name is David Madland and I’m the Director of the American Worker Project at the Center for American Progress Action Fund, an independent, nonpartisan, and progressive education and advocacy organization dedicated to improving the lives of Americans through ideas and action.
I appreciate the opportunity to present my views on this important topic—a topic that I have been researching for some time. I have written extensively in academic and popular publications about retirement policy and am also the author of a proposal for a new private-sector retirement-plan type called the Secure, Accessible, Flexible, and Efficient, or SAFE, Retirement Plan.
In my testimony, I will discuss the many problems of our current private-sector retirement system but focus especially on how Maryland can help address these problems with proposals like the SAFE Plan, which combine elements of a traditional pension—including regular lifetime payments in retirement, professional management, and pooled investing—with elements of a 401(k), such as predictable costs for employers and portability for workers.
Social Security provides an essential baseline of income for retirees and must be strengthened to ensure that it continues to do so for generations to come, as the Center for American Progress has proposed. However, Social Security was only intended to be one leg of a three-legged approach to retirement savings. Employer-sponsored retirement plans and individual savings are supposed to be the two other legs.
Unfortunately, the private-sector workplace retirement system is broken. As the first generation to rely primarily on 401(k) plans begins to retire, we can see the cracks in the system.
Boston College’s National Retirement Risk Index estimates that 53 percent of households are at risk of having an insecure retirement, meaning they will be unable to maintain their preretirement standard of living.
Not surprisingly, the public is deeply concerned about their ability to retire. According to a 2013 report by the National Institute on Retirement Security, 85 percent of Americans are concerned that current economic conditions are affecting their ability to achieve a secure retirement, with 55 percent saying they are very concerned.
The current system is failing in a variety of ways, including a lack of coverage, high costs, and high levels of risk for savers. I’ll now turn to each of these issues and discuss how the SAFE Retirement Plan would address them.
CAP Senior Fellow David Madland delivers remarks for testimony before the Maryland Joint Committee on Pensions. Read the full testimony (CAP Action).