AARP Chief Operating Officer Tom Nelson Statement on Auto IRA Legislation

 | April 20, 2007

Thank you. I’m very pleased to stand with members of Congress from both parties who have found common ground on this common sense approach to America’s problem of inadequate retirement savings. I’m also glad to see AARP volunteers here today. These volunteers are not only passionate and work on important issues like Auto IRA, but they also care about the financial security of the children and grandchildren.

A lack of savings shadows millions of Americans in their later years and limits the American dream. At AARP, we see this bill as an important test of whether the leadership on Capitol Hill and the White House will address the issue of financial insecurity that is affecting so many people in our country.

About half the workforce does not have access to any kind of retirement savings plan at work, even though that is where most saving takes place. We believe everyone should have the opportunity to save for retirement.

One out of three people who receive Social Security relies on it for 90 percent or more of their income. One out of five relies on it for all of their income. It’s little wonder so many people are deeply fearful of what they will live on after they stop working.

Social Security is the foundation of security for Americans in retirement, but it is important to have a balance of income if people are to achieve security in retirement.

There have been many studies demonstrating the extent and progression of this problem. It’s time to move from documenting this problem to doing something about it.

Eighty-four percent of our members support having a workplace IRA as an option to help people save for the future. They support this idea not only because it would have a very positive effect on people 50-plus but also because our members are worried about what is in store for younger Americans who fail to save.

Only about one-third Americans believe the next generation will have a better quality of life than their parents had. That sense of pessimism is deeply troubling. It stands in stark contrast to the spirit and history of our country. It reflects a profound concern about being able to pay for health care and save for retirement.

Surely we can do better than that as a country.

The legislation we’re discussing here will help to give people a convenient, practical and effective way to save. Enacting an auto IRA is one of the most important next steps we can take to help Americans build a secure retirement.

We thank Senators Bingaman and Smith and Representatives Neal and English for their leadership and pledge to work closely with them to pass this bill.