Saving for Retirement: An Uphill Battle for Many Americans - Pew.org; AMAC
Reporting on the results of a recent national workforce survey, The Pew Charitable Trusts suggests that households without access to employer-sponsored savings plans, such as 401(k)s, face significant challenges in accumulating wealth to support their retirement years. Much has been written on this topic, given the effects of inflation, escalating health care costs in old age, and the generally poor prognosis for Social Security’s future. This predicament is not isolated to a small segment of the working population, as nearly half of the total workforce falls into this category.
The post by John Scott (Pew Retirement Savings Project Director), which you can read in full here, notes that the inability to save via employer-sponsored plans leads to a corresponding inability to build wealth, with a third of the more than a thousand surveyed living paycheck to paycheck, rarely or never having income left at the end of the month to put aside. This reality, the Scott article suggests, contributes to a growing wealth gap that threatens the financial stability of America’s elderly population. Pew reports that “The vast majority of the nation’s $20.8 trillion in retirement savings was accumulated through employer-sponsored retirement plans, such as 401(k)s,” yet an estimated 56 million workers do not have access to this type of savings vehicle. Further, the Scott post indicates that “…individuals are 15 times more likely to save for retirement if money is deducted automatically from their paychecks.”
Overall, this is an enlightening report on the importance of expanding access to employer-sponsored savings plans as a pathway to improving the financial picture for millions of American families. The Secure 2.0 Act provided substantial improvements in retirement savings options for many, but more can–and needs–to be done. Some of the key portions of the “One Big Beautiful Bill” currently in development in Congress would provide increased flexibility for workers to save, and there are many proposals to further solidify the future of America’s Social Security system. Among them are AMAC’s “Social Security Guarantee” plan, a portion of which promotes the provision of a new benefit designed to help and encourage workers to secure a financially sufficient retirement. Specifically, through the creation of an Early Retirement Account (ERA) structured as a voluntary, supplemental savings vehicle with preferred tax provisions and built-in portability, wealth accumulation could develop under the guidance of investment experts. With access restricted to age 62, death, or total disability, the recommended ERA would serve to create estate value for dependents and heirs. Linking the availability of an ERA to employment has the lateral benefit of recognizing the dignity of participating in the economy and the confidence that results from building financial self-sufficiency. That’s just one proposal in the AMAC plan, which you can read in full here…