Not enough Americans have access to a workplace retirement plan. Barely half (51%) of the workforce is covered by a retirement savings plan through their employer or union. Access varies by demographics, education, full-time versus part-time employment, and employer size.
To ensure more people have reliable access to such plans, lawmakers in the House of Representatives and the Senate have overwhelmingly approved the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which would help to close significant gaps between the resources Americans need for retirement and the resources they have.
The SECURE Act involves provisions that encourage more employers to provide retirement savings plans, particularly for the nation’s 27 million part-time workers—most of whom are women.
For example, the bill enhances tax credits for employers offering retirement plans with automatic enrollment. It also enables employers to join multiple-employer defined contribution plans that serve as fiduciaries, and to offer automatic contributions and low-cost savings accounts—features that can be especially helpful to small business owners.
Additionally, to grow retirement savings, the SECURE Act enables seniors to delay the withdrawal of retirement savings to age 72, allowing more time to accumulate assets.
As a way to boost savings, it eliminates the restriction on contributions to a traditional IRA after the age 70 1/2, and raises the savings limit for automatic enrollment, which can encourage employees who are able and want to save more to do so sooner.
To guard against outliving savings, the SECURE Act helps facilitate access to annuities in retirement plans so that more workers can have a source of guaranteed lifetime income, distributed monthly in retirement—which is what they want.
The bill also strengthens lifetime income disclosures, requiring an annual statement illustrating an account balance as a monthly income stream—thereby showing savings not just as a nest egg, but also as a “paycheck” meant to last throughout retirement.
Portions of this article were excerpted from a [commentary written by ROGER W. FERGUSON JR. and JO ANN JENKINS]1