Are We Finally Talking About Retirement?

In President Obama’s State of the Union address last month, he brought a critical issue into the spotlight with the myRA proposal: America’s retirement crisis.

Up until now, we’ve had little public debate about the impact of longevity on our workforce, our lives, and our savings. As I have said before, including on this site, our retirement crisis is about much more than just Social Security. That’s not to suggest Social Security doesn’t need reform, but it is just part of the “three-legged stool” of our retirement system, which also includes employer-sponsored plans and personal savings.

To address the retirement crisis, we need to reinforce every leg of the stool. That means strengthening Social Security, it means giving more workers the opportunity to access employer-sponsored plans, and it means changing behaviors so that people save as much as possible —especially workers whose employers don’t offer retirement plans, which is about half of the workforce.

The President’s myRA proposal was an encouraging step forward in the conversation surrounding retirement, not just because it elevated the issue to a national stage, but because it marks an important shift in the debate, from sky-is-falling pronouncements about Social Security to real engagement on making it easier for people to save for their futures.

Briefly, the myRA plan—which is being implemented under executive authority—gives workers without access to an employer plan an easy-to-use savings option, allowing them to make contributions directly from their payroll and earn interest on their investments.

Will the program fix everything? Of course not. But myRA, along with a proposal for “auto-IRAs” for workers who don’t have 401(k) access, represents a good step towards creating good savings behaviors—that is, helping people save as much as possible, as early as possible, and as often as possible.

Ultimately, I think we need to consider a much more far-reaching reform—possibly even mandated retirement savings, as Australia has implemented with great success—so that all Americans can be sure that they will have enough to fund their retirement.

Today, we have more years to earn—but also more years to pay for in retirement. The problem is, our retirement mindset—and our infrastructure—is designed for an era of lower life expectancies and shorter careers. The sad reality is that putting away 3% per payroll period just won’t cut it.

Again, I’m very encouraged that we’ve begun to look at our longevity challenge from a perspective that’s broader than Social Security. I believe that if we begin to grasp its effects on our economy and our fiscal picture, we’ll begin to understand just how much we need to do to prepare for the future. That’s why I plan to keep banging the drum on longevity, and I hope that Washington does too.

The opinions expressed are current as of February 2014, and are subject to change. Reliance upon information in this article is at the sole discretion of the reader.

Photo: United States Government Work / Flickr