The high cost of indifference: retirement is our country’s next Flint

Both candidates missed the mark in Sunday’s debate. Badly. Neither even hinted at the biggest challenge our nation will face in the next decade: the looming crisis in retirement security.

About 10,000 American baby boomers reach age 65 every day. And most are woefully unprepared for retirement. With retirement savings of less than $10,000 for many Americans, it is not inconceivable that poverty, in the coming years, could surpass heart and other diseases as the nation’s number one killer. Most of us planned our lives expecting to have the benefit of time for themselves and with loved ones in their golden years, but the money will not be there – at least not enough for everyone.

{mosads}This is a tragedy that is as preventable and predictable as the lead contamination crisis in Flint, Mich. And if the government does not address the retirement savings crisis immediately, we will continue “poisoning” the financial future of Americans.

The current system has failed, and it’s time to say so. The Melbourne Mercer Global Pension index rates the effectiveness of American retirement system as 14th out of the 25 countries that it surveys. The system is mediocre at best when it comes to adequacy, sustainability, and its ability to protect the interests of retirement savers.

So what to do?

• Every worker should have a retirement account with an entitlement to future benefits and a system that can provide a minimum level of retirement benefits above the poverty line for low-income earners.  There should be access for all Americans. Some people do not even have a place or easy ways to save. Everyone must.
• We need a system where required minimal contributions to retirement accounts vest immediately.
• Instead of annual limits for tax-deferred contributions to retirement plans, there should be lifetime contribution limits to maximize contributions when possible.
• To reduce pre-retirement distributions, pre-retirement benefits should be available only under specific circumstances, such as retirement, death, or permanent disability.

This is an issue that will require our government to rise above partisan politics and to demonstrate the best version of itself since it can’t solve the problem on its own. Even with Congress and the White House working together, employer practices, the need for better investor education, and cultural differences will still present meaningful challenges. 

It’s time for the government and the next President to make it a top priority. At a minimum let’s move these ideas through Congress, test them, and find those that make a difference. 

Frankly, it is inconceivable that retirement security is not at the forefront of the government’s agenda and a critical policy platform for the next President – whoever he or she may be.  We can continue to ignore the problem and regret it, or we can require our leaders take action to fix it.

Robert Stammers is the Director of Investor Engagement for CFA Institute.