The last Congress made notable progress on bipartisan retirement legislation that would make it easier for Americans to access lifetime income solutions. Now is the time to get retirement legislation across the finish line.
The Retirement Enhancement and Savings Act, reintroduced in Congress by Reps. Ron Kind (D-Wis.) and Mike Kelly (R-Pa.), contains a number of provisions aimed at increasing voluntary retirement savings, including repealing the maximum age for traditional IRA contributions, allowing for open multiple-employer plans and incentivizing small businesses to start new plans for employees. Importantly, RESA also includes provisions that would make it easier for employers to include lifetime income solutions in workplace retirement plans.
As it stands now, most Americans cannot use their 401(k) plan to contribute to an annuity over time. This means that unless someone has amassed savings large enough to purchase a protected lifetime income solution, he or she does not have a way to guarantee an income stream that will last through a potential 30- to 40-year retirement.
An additional provision in RESA would require employer-sponsored retirement plans to provide participants with an annual statement showing how their lump-sum savings translate into a guaranteed lifetime stream of monthly income. These lifetime income illustrations can help employees gain a better understanding of how much savings is needed to prepare for a more secure retirement.
Steady and consistent contributions, paycheck by paycheck, have always been key for those building their retirement savings, and this same disciplined approach must also be readily available for retirement income solutions.
Our leaders in Washington should engage on this issue now and empower the American people to better prepare for retirement.
Passing legislation in an election year in 2020 will be more difficult than it is now. Congress needs to prioritize the passage of common-sense, bipartisan retirement legislation this year.
Even in a divided Washington, the American people expect results on what’s important; encouraging a secure retirement is a unique issue where visible progress can be made.
This Congress has an opportunity to help more Americans plan for retirement—and ensure that living to 100 is something to be celebrated, not feared.
Jana Greer is president and CEO of AIG’s retirement business.