Of the many domestic problems Washington isn't paying attention to, the most serious could be the retirement crisis.
Many American workers are financially unprepared for retirement. Fifty-seven percent of U.S. workers surveyed report less than $25,000 in total household savings and investments excluding their homes, according to the Employee Benefit Research Institute. Only one in five private-sector workers has a defined benefit pension plan.
Many of these workers will muddle through with part-time work, family help and austere budgeting of Social Security. But many may be forced to chose between cornflakes and medications.
What to do?
There are a few ideas floating around. One of the most intriguing is from Sen. Tom Harkin, D-Iowa. He has proposed a new pension plan called USA Retirement Funds, which uses some aspects of traditional pension plans and some characteristics of 401(k)s.
His idea is to get workers to save more and make it easier for employers to help them. Employers who do not offer pension or 401(k) plans would have to make USA Retirement Funds available. But the employers' only obligation would be to select the funds, enroll employees and process the payroll deductions, a slight variant on the wage and tax record-keeping they already do.
Because the funds would be licensed and approved, the employer would have no liability and not be subject to IRS audits or other hassles. Sen. Harkin suggests a small mandatory employer contribution; we agree with experts such as New York pension lawyer David Morse, editor of Benefits Law Journal, who say employer contributions should be voluntary. The benefit would be tax-deferred until distributed and would be paid as an annuity, not a lump sum.
Such a vehicle would help give workers who set sound savings goals and a realistic retirement age the ability to retire with a decent nest egg, dignity intact.