Knowledge is power—especially when it comes to mapping out a retirement plan, according to two groups that help employees plan for retirement
The Insured Retirement Institute and TIAA are backing federal legislation that would require retirement plans to provide an estimate of how much lifetime income could be generated by each persons’ retirement savings. The bill is known as the Lifetime Income Disclosure Act.
"At a time when American savers are shouldering more of the burden of planning for their retirement themselves, legislation which increases consumer education is vital to ensuring financially secure retirements,” says Catherine Weatherford, IRI president and CEO.
An IRI study showed that 90 percent of employees want to know what their retirement savings will generate in lifetime income and 75 percent of plan participants said they would increase their plan contributions by four percentage points or more after seeing lifetime income estimates.
The legislation was introduced in the last session of Congress and reintroduced this session by Reps. Luke Messer, R-Ind., and Mark Pocan, D-Wis., and by Senators Johnny Isakson, R-Ga., and Chris Murphy, D-Conn.
The legislation would provide Americans with a visualization of how much their current savings will provide in their retirement years, as well as a better understanding of their savings options, IRI says.
Receiving such information, according to Roger W. Ferguson Jr., TIAA president and CEO, would “educate Americans about how their current savings translates to retirement income, encourage Americans to save more during their working years to close potential gaps, and increase awareness of the importance of having a source of guaranteed lifetime income.”
The House bill (H.R. 2055) was referred to the Committee on Education and the Workforce and has six cosponsors. The Senate bill (S. 860) was referred to the Committee on Health, Education, Labor, and Pensions. It is not known when the bills might receive a hearing.