charts showing significant increases in retirement savings. But the typi- cal near-retiree has seen no gains in retirement wealth in the last 40 years. BlackRock CEO Larry Fink made headlines earlier this year with his 11,000-word warning to shareholders that “nearly half of Americans aged 55 to 65 reported not having a single dollar saved in personal retirement accounts. “Nothing in a pension. Zero in an
IRA or 401(k).” Americans could learn a lot from
other nations. The U.S. pension sys- tem ranks 22 out of 47 countries, get- ting a barely passable C+ on the well- regarded Melbourne Mercer Global Pension Index. The U.S. loses points on adequacy of
coverage of retirement benefits, finan- cial sustainability, and the integrity of regulatory and governance systems. Nations with robust and equitable retirement systems that get As and high Bs — the Netherlands, Denmark, Finland, and Australia — mandate cov- erage and fully fund defined benefit promises in advance. The systems are simpler, well regulated, and universal. For decades I proposed many ver-
sions of a Guaranteed Retirement Account, most recently with my co- author Tony James, that would put every worker into mandatory, profes- sionally managed accounts. Benefits are paid out in a life-
time annuity. A version of GRAs was never seriously considered by Con- gress until 2022. The Retirement Savings for Amer-
icans Act is a bipartisan, bicameral bill sponsored by Sens. Thom Til- lis, R-N.C., and John Hickenloop- er, D-Colo., and Reps. Terri Sewell, D-Ala., and Lloyd Smucker, R-Pa., as well as a dozen additional cospon- sors. If passed, all private-sector work- ers — gig workers, part-time workers, everyone working with a Social Secu- rity number — will have access to a retirement savings plan if they don’t have access to a plan through their employer.
The U.S. loses points on adequacy of coverage of retirement benefits, financial sustainability, and the integrity of regulatory and governance systems. Modeled after the successful federal
Thrift Savings Plan enjoyed by federal employees, the plan features automat- ic enrollment, portability, simple low- fee investment options, and up to a 5% matching contribution via a refund- able tax credit for low- and moderate- income workers. The proposed legislation was
inspired by a collaboration between Kevin Hassett, former President Donald Trump’s top economic adviser, and me. Our com- mon ground is remark- able amid a deeply politi- cally polarized nation. The RSAA stands out for its bipartisan backing and practical approach. The 2024 presidential campaigns
have been almost silent on retirement security. Trump insisted the Republican
platform strip out the call for Social Security cuts. Influential House Republicans and a closely aligned think tank, The Heritage Foundation, have a full-throated argument that responsible governments should raise the Social Security full retirement age — which cuts benefits by 10% to 25%. The Heritage position is brave,
because it’s widely unpopular. An eas- ier course to the same goal of Social Security benefit cuts is to say nothing and do nothing. Social Security will cut itself in 2035. Let me explain. The Social Security
Trust Fund will pay full benefits only until 2035. If Congress does nothing, incoming payroll taxes will only be able to pay 83% of benefits owed. The cuts are automatic. The Republicans just wait. The Democrats have a tougher
job. Social Security needs revenue from higher taxes. Electioneering tax
increases is tough, even if it’s for Social Security. Oddly, what is not discussed is top
of mind for the bulk of voters. Voters over age 50 are both most worried about retirement and most likely to vote.
The turnout rate for those age
50-plus is over 70%, while less than 50% of eligible voters under 30 vote. Sixty-four percent of voters in 2022 were over 50, and they only represent 39% of the population. Since other sources of retirement income have not come close to comple- menting Social Security, they fail as substitutes.
Further cuts in Social Security
benefits would spike elderly poverty. Now, Social Security keeps 22.7 mil- lion adults and children above the poverty line, according to the Center on Budget and Policy Priorities. A set of policies I call a “Gray New
Deal” would be popular for any party and help solve the crisis. Mandate universal workplace retire- ment accounts with the RSAA. Fully fund and expand Social Secu- rity by increasing revenues through targeted taxes and investments. Expand Medicare by lowering the eligibility age to 50 and making the system first-payer, lowering firms’ costs of hiring older workers. Add long-term care to Medicare. The retirement crisis is bound to
insinuate itself in politics. The caul- dron of elder poverty, economic insta- bility, lack of pension and retirement savings, spiraling downward mobil- ity, and the worries of adult children and spouses obligated to care for elders in need is churning and may boil over.
OCTOBER 2024 | NEWSMAX 35
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