Congress May Have The Answer To Some Of Today's Retirement Planning Issues

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Jim Poolman

Jim Poolman, former North Dakota Insurance Commissioner, serves as Executive Director of the Indexed Annuity Leadership Council (IALC).

As America’s workforce experiences a shift in the way jobs are structured — such as the advent of the gig economy, for example — the prospects for retirement are also changing. This has several implications for anyone thinking about life after work.

First, Americans are living longer. Many are living active, healthy lifestyles, and life after 65 could reasonably last for decades. But a longer retirement requires more savings, and many Americans don’t have enough funds to justify quitting work at 65. In fact, in 2017, more than 30% of those ages 65 to 69 were still in the workforce, according to Bureau of Labor Statistics data.

Second, as referenced above, the nature of work is less stable than in previous generations. The gig economy provides millions of Americans the flexibility to work whenever and wherever they want, but more control over their time often requires workers to give up traditional benefits, including 401(k) plans and other retirement tools. Only 16% of individuals who exclusively work in the gig economy have access to an employer-sponsored retirement plan. This puts the burden of planning entirely on the worker, and with so many competing responsibilities, American adults often do not prioritize saving for retirement over more immediate needs. A 2018 studyfound that 42% of Americans have less than $10,000 saved for retirement.

Finally, the sheer volume of information (and opinions) available about retirement planning can induce a “paralysis by analysis” feeling, and without a clear plan, many adults find it easier not to plan at all. Of course, this is an extremely short-sighted approach, but as anyone who has ever agonized over what to watch on Netflix understands, more choices do not make an easier decision.

Pending legislation could help alleviate these issues.

Despite the issues faced by Americans today, there are solutions; some of them may come in the form of new federal laws. Congress is considering two bills that would greatly alleviate issues surrounding access and information, especially for workers who are not employed in standard, full-time positions. These bipartisan bills — the SECURE Act of 2019 in the House and the Retirement Enhancement and Savings Act of 2018 (RESA) in the Senate — have great potential to give Americans the boost they need to overcome some of the hurdles they face in retirement planning.