"Thanks to my colleague from
"Our national savings rate is a problem, our personal savings rate is a problem, our economy would be even stronger if we had more savings. But the real problem is that people just aren't saving enough for their retirement.
"One is we've got an aging baby boomer population. I'm among them. I think all three of us are, Mr. President, who are not saving enough. And that's a concern. Second is a lack of access to employer-sponsored plans. So you want everybody who is in the workplace to be able to have access to a 401(k), and yet when you look at this, particularly with smaller businesses, a lot of people just don't have access, don't have the chance to save. 401(k)s are great because remember the employer typically puts a match in for you so it's not just your money that's tax advantaged, but you also, unlike an IRA, you get the employer to put a match in and usually to help you with your decisions in terms of what kind of investments you make with that 401(k). Third, we found that, particularly with lower-income Americans, there was a real issue with the amount of savings. And who needs money more in retirement than lower-income Americans because that's where they don't have other savings to help them through retirement. All of this is predicated upon the reality that we are living longer as Americans, longer and healthier lives so we need more of those assets in retirement. The final one is inadequate lifetime savings. A lot of people have a 401(k) or IRA and they stop working. They think this is great and they take the lump sum. Maybe spend some of that, maybe buy the boat, maybe go on a nice vacation and then suddenly find, 'Oh my gosh, I'm living longer and longer, I hadn't expected to be in my 90s and still here,' and yet that's the trend right now is people are living longer so we have to ensure that there is longer lifetime savings as people are living longer and healthier lives.
"Eighteen months working with all of these groups on the outside, we came up with 57 different provisions to address these four areas, and how do we do it? First, for those who have saved too little to set aside more for their retirement. So for seniors, people who are over age 60 years old, we have a special catchup contribution. So if you're over age 60 years old, under our legislation, you have the opportunity to be able to put more aside in your retirement plan. That's important. Contribution limits go from
"We also say with regard to this first issue, it's not just being able to get a catchup contribution, what we tell employers, 'Hey, if you set up a plan that allows you to match six percent of pay rather than three percent of pay, we will give you a break from some of the onerous retirement rules in a safe harbor,' and that will encourage more of those employers do it and it also provides a tax credit for those employers to offer these safe harbor plans. So it's going to give more generous benefits to employees. That's something we think is appropriate again to help people save more for retirement.
"It also helps employees who are struggling to save for retirement and pay off student loan debt. So this is people who are saying, 'I would love to save for retirement, how can I do that when I have this student loan debt to pay off?' In Ohio, by the way, the average debt of someone coming out of a college or university is
"The second issue we talked about for today is small businesses. This is important because we know that is where most people who don't have access to retirement plans work. They work in smaller businesses. Bigger businesses tend to offer retirement plans and pretty generous ones. But the smaller businesses tend not to.
"The bill takes a number of important steps to help small businesses offer 401(k)s and other retirement plans for their workers. It increases the current law tax credit that's already out there but it improves it, increases it for small businesses for starting a new retirement plan from
"Third, one of the big problems we face is the planned participation rates for low-income workers, again, are well below what they are for others. This says expand access to retirement savings plans for hardworking lower-income Americans. The way we do that, and
"It also expands the eligibility of 401(k)s to include part-time workers. Now this is very important to the
"Finally, a significant challenge we face, again as I said earlier, is this lack of lifetime savings. Our bill provides more certainty and flexibility during Americans retirement years. A study by
"We have a number of initiatives to provide more flexibility to seniors in their retirement years. Specifically, the bill increases the age for the required minimum distribution from age 70 and a half which it is now, to 72 and to 75. It takes it up to 75 years old. Why is that important? For those of you who are not in retirement, you may not know that there is a rule that says you've got to start taking your money out of retirement at 70 and a half. If you're like my father who was working full time at 70 and a half, it was a head scratcher. Why should I take my money out of my 401(k) when I'm still working? I ran into a guy last week in
"I'm excited about all these provisions. This last one that I'm hearing a lot from, here's
"The bill provides help also in other ways. It reduces the current penalty for failing to take the required distributions from 50 percent of the short-fall amount to 25 percent in most cases and as low as 10 percent in some cases, if you self-correct the error. Finally, the legislation in order to help those who are in retirement encourages the use of qualifying longevity annuity contracts. QLACs. What is that? That is a retirement plan that provides annual payments to individuals who outlive their life expectancy. You think of an annuity or periodic payment, when you retire instead of taking a lump sum, you have one of these contracts where you're able to ensure that you're not going to outlive your retirement savings. They are an affordable option for a lot of Americans who are trying to hedge the risk of outlasting their savings. We should encourage those more and that's what we do in our legislation.
"Again, these are all common-sense reforms. They deal with all four of these challenges that we've seen as we've looked at the retirement system based on a lot of input from a lot of people. My hope is we'll be able to get this done. Our coalition includes the
"We've had the opportunity to work together for a couple of decades now on these issues. I'm glad that we are taking this next step, again, to provide additional options for people to be able to save for their retirement and have more peace of mind in retirement."