Americans Reject Government Managing Their Retirement Plans: Survey

While Beltway officials debate ways to get Americans to save more for retirement, most U.S. adults aren’t interested in the federal government’s help.

That role should go to employers, say respondents to a new survey.

According to the MetLife survey, a majority (54 percent) of Americans said they’re primarily responsible for their own retirement security, but they’re still six times as likely to want companies to be more involved in retirement planning (61 percent) versus less involved (9 percent).

Seventy-four percent of respondents would rather set aside part of their salary into a company-sponsored retirement account, versus 26 percent who preferred paying into Social Security.

Additionally, despite being the generation closest to retirement, only 14 percent of baby boomers said they want the government to be primarily responsible for retirement security. Twenty-four percent of millennials felt that way, the report stated.

“Employees recognize the important role their employers can play in planning for retirement,” said Roberta Rafaloff, vice president of institutional income annuities at MetLife. “They want a trusted partner who can help them navigate retirement security, creating an opportunity for companies to help their employees plan and save.”

'I Can Take Care of Myself'

More and more, that “trusted partner” isn’t the federal government.

“I have already saved enough cash, stored in S&P 500 index funds, to retire by age 55,” said Mike Gnitecki, 33, a health professional near Dallas, Texas. “From my perspective, I just want the government to stay out of my retirement. I can take care of it myself.

“I don't mind paying Social Security taxes, but I'm not expecting anything from Social Security when I retire.”

Others said they’ve increasingly lost confidence in the government to handle anything, let alone employee retirement savings.

“I’m bearish on the federal government being able to accomplish any big-ticket policy items, including working towards solving retirement needs,” said Paolo Mastrangelo, a policy/regulation advisor in financial services and banking, at Holland & Knight in Orlando, Fla.

“A government-run retirement savings program doesn’t change the fact that millennials, for example, have mountains of debt and lower earning potential than any prior generation.”

The larger existential problem is how government and other stakeholders can begin to make millennials and other investors attuned to retirement, he added, without sacrificing the need to build financial security today.

Government is already playing an increased role in worker retirement savings programs, with mixed results.

“Government has considerable experience with administration of employee benefits, and the public has ample evidence of its track record, including Social Security, Medicare, Medicaid, state public sector pension plans, and various state insurance funds,” said Mitchell B. Langbert, a business instructor at Brooklyn College Koppelman School of Business.

Langbert worked for the New York State Legislature in the 1990s. Political leaders would regularly use the workers' compensation State Insurance Fund and state pension funds to manipulate the state budget.

“That is a national pattern,” he said. “Pew reports that the average public sector pension fund is only 72 percent funded.”

Poor History

The history of Social Security is similarly subject to political risk, Langbert said. “Benefits were raised in the early 1970s, then they were reduced in the early 1980s,” he said. “As of today, future liabilities are expected to be underfunded in 16 years.

Medicaid and Medicare have had repeated fraud problems, Langbert said.

“Given this record, why would you expect that the public would be eager to have government entities manage employee benefit money?” he asked. “Do France and Greece offer better examples? Or does the USSR, which devalued the ruble and destroyed its citizens' savings?”

Suffice to say, Langbert echoes what many Americans are feeling about the ability of U.S. political leaders to be effective.

“If the last two decades are an indication, then we can expect more polarization, more divided government, and less legislative productivity on issues impacting retirement,” Mastrangelo said.

Brian O'Connell is a former Wall Street bond trader, and author of the best-selling books, The 401k Millionaire and CNBC's Guide to Creating Wealth. He's a regular contributor to major media business platforms. Brian may be contacted at [email protected]