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  • Obama Budget Recognizes the Need for More Retirement Savings

    While many aspects of the Obama budget are questionable and just plain wrong, they recognize the need for more Americans to be able to save for retirement. The budget includes the Automatic IRA, a cross-ideological proposal developed jointly by The Heritage Foundation and the Brookings Institution which will give up to 80 million workers a simple and easy way to save for retirement. It also has support from publications as diverse as National Review and the New York Times.

    The Auto IRA allows employees who don’t have any other types of pension or retirement savings plan to be automatically enrolled into a payroll deduction IRA. If they want to participate, they don’t have to do anything more; they will be enrolled into an IRA that is invested in a balanced lifetime account. If they don’t want to save for retirement, all they have to do is to say no.

    While 401k plans have been available for several decades, less than half of employed Americans work at a company that offers them or a traditional pension plan. The other half of the workforce doesn’t have that option. Saving is especially important because the very act of doing so changes behavior. People become more connected to their communities and think more about the future when they save. In short, saving builds conservative values.

    The Auto IRA is a simple way for those who are not saving for retirement now to begin to do so. That is why it has such broad, bipartisan, cross-ideological support. For instance economist Martin Feldstein said “I am a great enthusiast of automatic enrollment IRAs. I think as a policy, it’s a no-brainer. I think the legislation should be enacted. I can’t imagine why there would be any significant opposition from political players on either side of the aisle.” Whatever else is in the Obama budget, the administration got this one right.

    Posted in Economics [slideshow_deploy]

    17 Responses to Obama Budget Recognizes the Need for More Retirement Savings

    1. EMag says:

      Typically, I love your work, but Heritage is on the wrong side of the fence with respect to this issue. I would prefer if the government stays out of my retirement planning, thank you very much. This is a complete intrusion into our personal lives. This reeks of "you are too stupid to plan for your retirement, so I'll do it for you. Don't worry, I am from the government, I am here to help". If the government really wants to help with retirement, let me opt out of Social Security. I'll never see that money anyway. The statement "people become more connected to their communities…." is the definition of collectivism. Heritage is better than the "nudge" system.

    2. Spiritof76, New Hamp says:

      Why do we constantly engage in compartmentalized thinking? What good is it if we can invest more in IRA? A socialist economy is the goal of Obama. The IRA funds will languish with hardly any appreciation with a potential for confiscation. The people that had invested in the IRA have seen erosion of its value by 50 to 60% now! Additionally, the tax burden and the debt being piled on by Obama will hardly leave any room for IRA savings. It is a ruse to disguise the diabolical intent of the socialists running the country today.

    3. Barb -mn says:

      What's the difference from the way it's always been? I chose an amount of money I earn to go into a retirement account. According to Obama it will be going into the hands of those that chose not to start an account. So, while I am living with less of what I earn, they are living with more. I will do with less of my earned retirement while others will be handed a retirement.

      Obama plays dumb, well. He'll turn it around like everything he's ever said in the favor of the people.

      Too much deceit. Am unable to trust.

    4. Matt, Arkansas says:

      Sounds great, but how long before the gvt requires the employer to match contributions? Also, will there be any tax incentive to save?

    5. Bob, Mansfield TX says:

      I'm not as hopeful as Mr. John. This is not an administration which believes Americans should build and cultivate wealth. It also believes that all Americans should be dependent upon government from cradle to grave, including for their retirement. Plus, if there is a buck coming out of an employee's paycheck, liberals will always look for ways to steer that dollar into Washington's coffers. I see this as the first step toward eliminating market-based 401(k) plans and then merging these Auto IRAs with the bankrupt Social Security program. We will have one government-run mandatory retirement program that takes retirement savings out of the private sector. The continuing nationalization and federal control of individual banks will make that easier to do.

    6. John NY says:

      and just how long do you think it will be before they figure out a way to get there hands on it, same as social security. I can think of plenty of oppostion. On the surface it sounds good, remember a couple of months ago when they wanted you to give them your 401k and they would give you $600 month…

    7. ra,ohio says:

      This is yet another step by the Obummer administration to socialize our country.

      He will constantly demean the people that have saved money in their 401ks or IRAs and sneak into the banks that maintain them.

      One step at a time.

      Pay no attention to the man behind the curtain……..not.

    8. Marshall Hill MI. says:

      We can just play into the Socialist plot until they decide the money is theirs to administer!

      NO WAY!

    9. duelles, Santa Fe, N says:

      At age 60 and semi retired, I await the day when the Gov't seeks to tax my IRA. It is money that they will try to confiscate. they will not get mine.

      But, I am appalled at the number of my contemporaries who have done too little to provide for their retirement -which may never happen- and will need to work and save for years more than normal in the recent past. I go for the chance to save.

      The Gov't should 'promote' the general welfare. This IRA funding fits that bill.

      Great bumper sticker:

    10. Jim Smith, New York says:

      Our Federal Government doesn't even qualify as the last place I would trust with my retirement savings. Any normal person who has money to manage and grow, should not turn those functions over to anyone. If you can't manage it, you don't deserve to have it. It's REAL SIMPLE.

    11. louis hoffmeyer sain says:

      how diabolical is that,he systematically destroyed most of our pensions though his asinine assumption of robbing the treasury to spend our way out of dept. he now says we should start saving for retirement? how much more of this are we going to put up with? we owe our children a better legacy then this.

    12. Pingback: Automatic enrollment is in the new Obama budget proposal « Nudge blog

    13. Pingback: Automatic enrollment is in the new Obama budget proposal | Rollover USA

    14. duelles, Santa Fe, N says:

      If, as Jim from NY says, The money will be with the Government then he is right. The program is wrong. But I confess to have read that a 'balanced life time account' was not such a vehicle. I will do more DD on this one.

    15. R-Williams says:

      I'm wondering why Heritage would support a government mandate/requirement on businesses (especially small businesses) to be responsible for the nation's retirement planning. Another IRS form to fill out. More government bureaucracy to navigate. I thought we were for small government and personal responsibility.

    16. B.W., Butte MT says:

      If they don’t want to save for retirement, all they have to do is to say no.

      Evidently, the first person who posted missed this line in the text. The Government is forcing people to do anything. You don't want to save for retirement….just say no. Get it? God, you right wing nutballs get so defensive.

    17. Pingback: Thou Shalt Save! « Essential Knowledge

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