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Better Retirement Plans

Clearly there is both public desire for and a defined need to improve the retirement security of America’s workers.

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A recent poll conducted by Bankrate Inc. found that only about 3 in 10 workers expected to have enough money to retire comfortably. Nearly 7 in 10 Americans have set low expectations about their retirement prospects. One in five Americans said they were afraid they would never be able to retire. Additionally, many Americans of retirement age are already struggling to make ends meet. When one considers just the quickly rising costs of necessities, it is easy to see why Americans, both of retirement age and younger, are concerned about their retirement security.

Clearly there is both public desire for and a defined need to improve the retirement security of America’s workers. Policymakers must catch up to fill these voids and design a more fulfilling retirement plan for America’s workers.

If one were to design an ideal retirement plan, it would likely encompass the following features:

  • Broad-based coverage, which covers all workers automatically
  • Secure money for retirement, with limited opportunities for leakage of retirement assets
  • Portability of benefits, which will allow workers to retain benefits if they switch jobs
  • Shared financing, with contributions from both employees and employers
  • Lifetime benefits, so that retirement income cannot be outlived
  • Spousal and disability benefits to provide protections against death or the inability to work
  • Professional management of assets
  • Low costs and fees

Public policy should strengthen the existing defined benefit plans that already do a good job of offering retirement security to American families. Policymakers should adopt policies that will allow plans that do not yet meet these criteria to incorporate features that will bring them closer to this ideal.

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