Tags: retirement | wedge issue | senior citizens | pete buttigieg

Retirement Insecurity Becomes a 2020 Wedge Issue

Retirement Insecurity Becomes a 2020 Wedge Issue
Democratic presidential candidate South Bend, Indiana, Mayor Pete Buttigieg speaks to guests during a campaign stop on November 26, 2019, in Denison, Iowa. (Scott Olson/Getty Images)

By
Friday, 06 December 2019 03:16 PM Current | Bio | Archive

When the retirement issue surfaced in the presidential race, the most ambitious plan wasn't from a Democratic elder like Joe Biden, Elizabeth Warren, or Bernie Sanders.

Pete Buttigieg, the 37-year-old mayor of South Bend, Indiana, announced the “Gray New Deal” to tackle America’s real retirement readiness gap.

He would add another layer to our already insolvent Social Security system by adding a new minimum benefit of 125% of the federal poverty line for anyone who worked at least 30 years. For current workers, he’d create a “Public Option 401(k).” Workers who chip in 1.5 percent of their pay would trigger an employer contribution of 3 percent. Mayor Pete also calls for a new $90 per day benefit for long term care with no time limits.

The magic financing for this would be a range of additional, unspecified taxes including automatic hikes in payroll taxes on upper-income earners above $250,000 implemented to keep the program going.

Mayor Pete has learned from Elizabeth Warren that having too much transparency on projected costs can spell trouble for a candidate. Her claims to give current and future Social Security recipients an extra $200 a month financed with an additional 14.8% in higher payroll taxes as well as an additional 14.8% investment income tax on upper earners was roundly ridiculed as unrealistic.

But critics of liberal retirement plans have to do more than savage their sloppy math. A future retirement crisis is real because the costs of our longer life stage has escalated dramatically. A World Economic Forum report finds the U.S.’s retirement savings gap could be the world’s largest at US$137 trillion in 2050.

Vanguard, the wealth management firm, reports that the median 401(k) balance for those 65 and over is just $58,035. Over 50% of individuals aged 55 to 64 have retirement savings equal to only one year’s income — far below what is needed to maintain a middle-class standard of living.

President Trump and Congressional Republicans would be wise to wake up to the potency of the retirement issue. The 2016 election was the first time in decades that voters over 65 exceeded younger voters between 18 and 34.

Baby Boomers are increasingly being called on to care for aging parents. Many 65 year-olds today will also require expensive long-term care down the road whether at home or in a community facility.

The national annual median cost of home care alone is $51,500 according to Genworth Financial.

President Trump has rightly touted the impressive growth of 401(k)’s during his term. Unfortunately, a large portion of the country does not own a retirement savings fund.

Never has greater emphasis on financial literacy been more essential for people to better understand savings and investment.

The time is ripe to enlist the financial community to further a comprehensive educational effort highlighting retirement readiness as a national problem.

While Elizabeth Warren constantly berates Wall Street, no industry understands the challenges better. The government could work with retired professionals to educate our public on the scope of the problem and share basic investment strategies.

It would certainly accomplish more for communities than Warren’s Accountability Capitalism plan.

1) We need to get the SECURE Act to President Trump’s desk. This measure has 29 provisions aimed at increasing the use of tax-free private retirement accounts. It’s the first substantial overhaul of 401(k)s since the 1980s. The SECURE Act would allow small businesses to set up lower-cost and easily administered retirement plans. Many part-time workers would be finally eligible to have their own plan. Sponsors of retirement plans could include annuities as an option by reducing their liability exposure. The legislation passed the Democratic House in May but is languishing in the Republican Senate as members quibble about extraneous issues.

2) Economists Jeff Yass and Stephen Moore recently revived the concept of “Own America Accounts” which enables individuals to direct a small slice of their Social Security contribution into stocks or bonds. We should not give up the fight on this common sense idea for the sake of younger generations who deserve a chance at building wealth.

3) We can support Senator Pat Toomey’s bill to allow retirement savers to tap up to $2,000 in 401(k)s and IRAs to purchase long term care Insurance. The goal is to make insurance premiums more available and affordable.

4) Corporate America has been increasing the hiring of seniors for unfilled positions and there should be added incentive to continue this trend.

Most important is to do everything possible to encourage and maintain economic growth. Nothing works better to sustain savings, income, and job creation for future retirees facing gaps in their nest eggs.

Pete Buttigieg and Elizabeth Warren have signaled just how much the Left is going to use retirement insecurity as a campaign wedge issue in 2020.

It’s important supporters of economic growth have their response ready and offer voters an alternative.

Clara Del Villar is Director of Senior Initiatives at FreedomWorks Foundation. Her financial industry career included senior roles in Investment Management, Private Asset Management, and Capital Markets. Her entrepreneurial ventures involved digital media as Founder, CEO of The Hispanic Post; energy tech as founder of InEnergy and health tech. She is a former advisor at 60Plus Foundation. Currently, she is a Board Director at General American Investors Co. and Executive Committee of Weill Cornell Women’s Health Symposium. She earned a BSFS at Georgetown University. To read more of her reports — Click Here Now.

© 2020 Newsmax. All rights reserved.

   
1Like our page
2Share
ClaraDelVillar
When the retirement issue surfaced in the presidential race, the most ambitious plan wasn't from a Democratic elder like Joe Biden, Elizabeth Warren, or Bernie Sanders.
retirement, wedge issue, senior citizens, pete buttigieg
903
2019-16-06
Friday, 06 December 2019 03:16 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved