START: Taking a Look at the Impact on Savers
American Retirement Association’s Chief Content Officer Nevin Adams, in a post today on www.napa-net.org, examines the implications of the recently-introduced plan designed to tackle the well-established savings deficiency problem facing future retirees. Titled “Supplemental Transition Accounts for Retirement (START),” the plan calls for the creation of worker accounts funded by mandated wage withholding of 2% (1% from employees and 1% from employers) up to the maximum amount subjected to FICA tax, with additional provisions for governmental contributions for lower wage earners.
As Adams points out in his post, employee contributions would be post-tax, and much of the anticipated benefit of the proposal assumes that workers would not offset the mandate with reductions in contributions to other forms of workplace savings. Likewise, he observes that the projected benefits do not address the potential for employers’ reducing other forms of contribution matching (for example, in 401(k) plans.)
Read Adams’ full www.napa-net.org post here to get a better understanding of the American Retirement Association’s views on this proposed Social Security feature. Then, take a look at the Association of Mature American Citizens‘ (AMAC) proposal for a somewhat different solution to the problem. Specifically, AMAC’s “Social Security Guarantee Act of 2017” addresses the same objective of START–providing a means for all earners to have more income available at retirement–but takes a different approach by recommending the availability of “Early Retirement Accounts” that do not call for tax increases. The AMAC proposal also differs from the START design in that it would call for voluntary employee-employer participation as opposed to a mandate. Learn more about AMAC’s proposal here…
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