Q: Some of us think we'll be working into our 70s. What do you think retirement security should look like?
A: Social Security is still going to be a key pillar to it. But beyond Social Security, we're going to have to do more to encourage people to save effectively. Some rules that we've already passed would, for example, encourage employers to auto-enroll their employees. It turns out that it makes a big difference when you first start a job if the employer says, "We're automatically enrolling you in a savings plan unless you opt out," or they say, "Do you want to opt in?" A lot of people don't opt in, but if they're automatically enrolled, they're more likely to stick with it.
Q: How would you grade America's 401(k) system?
A: I don't think it's failed. I think that what is absolutely true is that people don't have the same security that they had under a defined benefit retirement plan. And we don't have a lot of those plans left. So if in fact we are able to structure portable retirement accounts that travel with you as you change from job to job — because very rarely do people have the same job for 30 years now — then we've got to make sure that those are strong, that those work and that people are actually using them.
Q: Is the logic behind the revised fiduciary rules to help people make smarter choices in the marketplace?
A: I think the logic is to make sure that for those persons who choose to use a financial adviser, they can feel more confident that that financial adviser has to abide by basic principles. When you go to a doctor, you're counting on that doctor to prescribe the right medicines for you based on what's needed to keep you healthy and not what's going to be padding their bank account. And the same should be true with a financial adviser. They're providing a service. But they have got to make sure that that service is one that looks out for the consumer.
Q: What can you tell the typical 50-year-old, or 30-year-old, about Social Security and Medicare?
A: What I'd say, first of all, to the 50-year-old is even if we didn't make any changes whatsoever, Social Security and Medicare will be there for you. To the 30-year-old, what I'd say is that with just some modest tweaks, we can make sure that in fact Social Security is there for them as well. For us to continue to make more progress on [Medicare], we've got to make our health care system more efficient. We're doing that with reforms that encourage hospitals and doctors to focus on quality of care and not the number of procedures they're carrying out.
Read the full interview transcript with President Obama.
Also of Interest
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- Social Security and survivor benefits
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