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Pension Rights Center (PRC) Executive Director Karen Friedman testified before the Senate Health Education, Labor and Pension (HELP) Committee during a July 17th hearing entitled “Freedom to Work: Unlocking Benefits for Independent Workers.”
Friedman told members of the Committee that they must act to address Americans’ justifiable fear of having insufficient resources and income to fund their retirement years.
“We’ve heard from tens of thousands of people – all across the country – who tell us how they’re struggling in retirement because they can’t make ends meet,” Friedman said in her testimony.
That’s because most people don’t have a pension, many haven’t saved enough in their 401(k)-type plans, and an alarming number of people don’t have any retirement plan at all, she said.
Friedman related her recent conversation with a retiree named Cindy, who told her to be sure to convey to the committee that “retirement security isn’t a partisan issue – neither a Republican Party issue nor a Democratic Party issue – but rather, an American issue.”
Cindy also told her that “We all are united in wanting to have sufficient money after years of hard work so we can pay our bills, stay part of our communities, support local businesses and help our kids and grandkids.”
Surveys support Cindy’s idea that running out of money in retirement is a top concern for Americans, Friedman said. One poll, from Allianz Life Insurance Company, showed that 64% of Americans are more worried about retiring without adequate income than they are about their own death.
The data on retirement plan access and adequacy underscores these concerns and fears. Just half of private sector workers participate in an employer-sponsored retirement plan. Social Security, relied on by millions of retirees as their sole source of income, averages just under $24,000 a year for a retired worker and needs to be strengthened and enhanced, Friedman said.
Even for those who are covered by an employer plan, the news isn’t great, Friedman told the committee.
Due to a “dramatic shift from defined benefit plans—which provide secure, guaranteed lifetime income—to less secure 401(k) plans, most employees aren’t saving nearly enough money to make it through retirement.” In addition, these plans require members to decide whether to participate in the plan, how much to contribute, what to invest in, whether to withdraw the money before retirement, and, finally, how to make their savings last for as long as they do. That’s a lot to ask.
Friedman told the committee that PRC has developed policy principles to be used to evaluate any legislation aimed at increasing retirement income, particularly for low-and-moderate wage earners.”
Under PRC’s principles, such legislation must provide the following:
Friedman also said during her testimony that PRC applauds the “Pensions for All Act,” introduced by Ranking Member Bernie Sanders (I-VT), which largely embodies these principles.
PRC is a national, nonpartisan organization that protects and promotes the retirement income security of workers, retirees and their families.
For more information, contact Communications Associate Kate Pixley at kpixley@pensionrights.org.
