you believe 401(k)s are a joke ó many people will
never save enough or invest well enough to retire ó
then perhaps the idea of a mandatory savings account
might do the trick.
not an idea thatís likely to spread like wildfire,
given that a massive retirement crisis isnít going to
erupt tomorrow. And 401(k) savers who rode the wave of
the bull market, frankly, arenít complaining much
Hamilton (Tony) James, executive vice chairman of
Blackstone, is pushing the notion of a new type of
mandatory savings account based on a long-term worry.
going to have huge numbers of the elderly poor,"
said James, who spoke to the Detroit Economic Club on
Thursday at the Westin Book Cadillac in Detroit.
is the co-author with labor economist Teresa Ghilarducci
of a new book called "Rescuing Retirement: A Plan
to Guarantee Retirement Security for All
told the Detroit group that only about 15 percent of
Americans have a defined-benefit pension plan. Among the
rest, only half have a 401(k) plan and the other half
have nothing, he said.
have a particularly tough time, he said, because theyíre
burdened by student loan debt and some donít start
saving for retirement until well into their 30s.
might not have retirement savings because they work for
an employer who does not offer a 401(k) plan or a
pension; some donít want to participate and save money
in a 401(k) plan.
surveys have raised similar alarm bells: The Federal
Reserveís report on the economic well-being of
households in 2016-17 indicated that many consumers
report that they lack retirement savings.
asked what types of retirement savings or pension they
have, 28 percent of non-retired adults indicate that
they currently have no retirement savings or pension
whatsoever," the Fed report said.
report noted that oneís savings can vary by age and
health, as well as income. Almost 90 percent of employed
respondents age 45 or older have retirement savings, but
only 34 percent of those who are out of work because of
a disability have retirement savings, the Fed stated.
first raised the idea of a national retirement savings
plan in 2015 and the new book further drives home that
plan is for a Guaranteed Retirement Account where
workers and their employers would each contribute 1.5
percent of wages into the accounts. The plan would
create a new $600 federal tax credit for all savers. As
a result, a lower income saver would be able to save
because their contribution would be offset by the credit
money would be managed by professionals, much like a
pension plan. The payouts at retirement would be based
on a lifelong annuity for the retiree and spouse.
your money. Itís your account," James said. The
plan would not replace Social Security.
told the group that the need is there and the idea is
there but he acknowledged that thereís no crisis
tomorrow to create that sense of urgency.
said people would be allowed to stay in the 401(k) or
move to the guaranteed retirement account.
a person, youíll have a choice," he said.óóó