A bipartisan group of senators introduced a proposal Tuesday to help Americans save for retirement.
Sens. Tom Cotton (R., Ark.), Heidi Heitkamp (D., N.D.), Cory Booker (D., N.J.), and Todd Young (R., Ind.) are behind a package of legislation which is focused on encouraging everyday Americans to add to their savings. The package is a product of Cotton and Heitkamp's joint work as the chairman and ranking member, respectively, on the Banking, Housing, & Urban Affairs Committee's Subcommittee on Economic Policy.
Such reforms would be beneficial, the senators argue, because of the current dismal state of saving among Americans. Nearly half of American families do not have retirement account savings, the Economic Policy Institute reported. One-third of full-time employees do not have access to a workplace savings plan, the Pew Trusts have found. And 40 percent of Americans do not have sufficient savings to cover a $400 emergency without selling their possessions.
The four bills are meant to tackle the different ways Americans currently save too little. One proposal would help small businesses—99.7 percent of firms—join professionally managed pooled employer retirement plans by reducing regulatory barriers and thereby lowering administrative costs, as well as reducing small businesses' legal liability. Another would strive to make a greater number and variety of retirement plans available to working Americans, and incentivize plan sponsors to use automatic enrollment.
"This legislation will help lighten the burden Arkansas small businesses face in offering retirement plans to their employees," Cotton said. "Making these few simple changes could make a big difference for Arkansas workers and help them retire with financial security and peace of mind."
The bills would also introduce reforms to address the dearth of emergency savings. Employers would be allowed to enroll their employees in an emergency savings account in addition to a retirement account, thus limiting the "leakage" of retirement savings that must be spent in emergency situations. Individual tax payers would be permitted to "pre-commit" to saving their tax refunds, to help ensure an easy source of savings.
"Every day, millions of Americans go to their jobs, work hard, and play by the rules to support their families and put food on the table each night," said Heitkamp. "But far too often, they still struggle to get by each day, as they aren't able to think about their futures and plan for retirement so that they are taken care of down the road. Our goal is to invest in workers throughout their lives by making sure they are able to save for retirement now so they will be set up for success in later years. That just makes sense."