Report

The Book 'Aging Gracefully: Ideas to Improve Retirement Security in America' (Spring 2007 Trust Magazine briefing)

quick summary

A proposes legislative and administrative changes that would make saving for retirement easier for middle- and lower-income households, while at the same time offering practical savings ideas for workers. Aging Gracefully: Ideas to Improve Retirement Security in America was published by the Century Foundation Press and written by William G. Gale, J. Mark Iwry and Peter R. Orszag, Brookings Institution scholars who are principals of the Pew-supported Retirement Security Project, a partnership of Brookings and Georgetown University’s Public Policy Institute.


A new book addresses this situation and proposes legislative and administrative changes that would make saving for retirement easier for middle- and lower-income households, while at the same time offering practical savings ideas for workers. Aging Gracefully: Ideas to Improve Retirement Security in America was published by the Century Foundation Press and written by William G. Gale, J. Mark Iwry and Peter R. Orszag, Brookings Institution scholars who are principals of the Pew-supported Retirement Security Project, a partnership of Brookings and Georgetown University's Public Policy Institute.

The authors point out that the current retirement savings system does not work for lower-income households, who need it the most. The system offers few incentives to participate and little guidance to navigate through confusing issues such as level of contribution, retention and investment allocation. As Gale often puts it “You don't have to be a mechanic to drive a car, and you shouldn't need a Ph.D. in financial economics to navigate the pension system.”

Yet surveys and a Retirement Security Project research experiment have shown that people will save for retirement if it is made easy, and that fact is the basis of the authors' common- sense recommendations for policy changes.

They argue for: automatic 401(k) features for workers in companies with employer-sponsored plans and automatic IRA enrollment for workers in companies without 401(k) plans, with workers always having the ability to opt out; improved “Saver's Credit” tax savings for middle- and low-income workers who participate in these savings plans; and reduced implicit taxes on retirement savings imposed through means-tested benefit programs such as food stamps, Medicaid and cash welfare assistance.

For more on retirement security, go to the project's Web site at www.retirementsecurityproject.org.

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