Automatic IRA Act Increases Savings Potential
By: Source: AARP.org Date Posted: 2007-09-05 14:43:26.683158-04:00
Tens of millions of Americans dream of being able to retire with enough money saved to enjoy financial security for life without having to work if they don't need to. However, millions of Americans apparently need help to move from dreaming to taking action. Studies show most people hit a roadblock when it is time to take steps to individually build their retirement income.
In April 2007, U.S. Sens. Jeff Bingaman, D-NM, and Gordon H. Smith, R-OR, sponsored a plan called the Automatic IRA Act of 2007 that may help more Americans save for retirement.
"Auto IRAs would enable millions of Americans who have no savings mechanism through their employer to begin building a secure retirement," said Smith.
Senator Bingaman added, "The first step to addressing this growing inequity is to ensure that all workers have easy access to a retirement account and the ability to have part of their wages go directly from their paycheck into this account."
The Retirement Security Project, which is headed by Mark Iwry of The Brookings Institution and David John of the Heritage Foundation, has done extensive research to find that employees as well as employers are both winners. Employees have the opportunity to gain peace of mind in their retirement plan. Employers can receive tax breaks as well as a better chance for recruitment by offering an automatic IRA as part of their compensation package. And employees can choose to opt out of their employer's 401K program if they wish to do so, for temporary financial or other reasons.
According to the Brookings Institute, "a growing body of empirical evidence suggests that the automatic 401(k) may be the most promising approach to bolstering retirement security for millions of American families."
AARP supports the automatic enrollment plans as a practical, realistic way to ensure that Americans take prudent steps to ensure lifetime financial security. AARP Florida invites members to contact their representatives in Congress and to ask them to support the Automatic IRA Act of 2007.
Related Articles
- Helping Americans Save
- Mission Retirement, a Retirement Planning Video
Other Resources
- The Automatic 401(k): A Simple Way to Strengthen Retirement Savings
- Automatic 401(k) Overview for Employers
- Pursuing Universal Retirement Security Through Automatic IRAs (Draft)
- Automatic IRA Would Assist Employees Without Retirement Plans
- Think tanks: Allow automatic IRA payroll deductions
- The Retirement Security Project
preview