Bipartisan action is rare in Washington — or anywhere else — these days. On Tuesday, however, House Republicans and Democrats united to pass a proposal intended to boost retirement savings for American workers. Let’s hope the Senate follows suit.
According to a 2021 survey by the Transamerica Center for Retirement Studies, the median amount saved for retirement across all age groups — the number at which half the population falls above and half below — is just $93,000. That’s woefully inadequate for Americans in their 40s, 50s or 60s. It’s not surprising, then, that about 25 percent of retirees receive 90 percent of their income from Social Security, which was meant to be supplemental.
In 2019, Congress tweaked the laws governing 401(k) accounts in an effort to make them more available to more workers and to allow retirees wider leeway on withdrawals. The Secure Act 2.0, which sailed through the House 414-5 this week, would add to those reforms.
Among other things, the legislation raises the age at which retirees must tap retirement accounts to 75, increases the amount of money workers close to retirement may contribute to 401(k) funds, provides more access to retirement vehicles for part-time workers, and allows charities and other nonprofit organizations to band together to offer joint plans.
Given that “Americans are working longer, we want them to keep saving longer,” Rep. Kevin Brady, a Texas Republican who co-sponsored the bill with Rep. Richard Neal, D-Mass., told The Wall Street Journal
In a perfect world, the tax code would not be a vehicle for social engineering, and the best way to help Americans improve their retirement prospects would be to let them keep more of their own money in the first place. But effective policy must be grounded in reality rather than theory. It makes fiscal sense to encourage Americans to better plan for their own retirements and to re-examine tax laws that discourage workers from stocking away more for their later years.
The proposal will now move to the Senate, where Democratic and Republican leaders of the Health, Education, Labor and Pension Committee told The Hill that they plan to move a proposal “later this spring.” Whatever differences arise between the Senate and House versions would be ironed out in a conference committee.
“What I want the most is for Americans to control their own money, have safe options on how to invest and save, and live with as few government and industry middlemen or middlewomen as possible,” Sen. Richard Burr, R-N.C., told The Hill.
Such a final product would be well worth passing.