“In recent months, we’ve seen how workers can lose a lifetime’s worth of savings if their company were to fail,” the president said. “So my administration has proposed reforms to make sure that the money Americans put away in their working years grows safely, so it is available in their retirement years.”
Bush highlighted some of the proposals his Pension Task Force introduced recently, such as diversification out of company stock after a three-year period. Concerning blackouts, the president expressed a particular desire to make the playing field level between employers and employees by urging Congress to pass legislation that would prohibit employers from exercising options during a blackout period.
“What’s fair on the top floor should be fair on the shop floor,” he said.
“To make good investment decisions, workers need sound advice and timely information,” the president further said. “Employers should be required to provide updates on workers’ retirement account values every three months. And we should change current law to remove the threat of lawsuits from employers who provide sound third- party investment advice.” With the latter statement Bush reiterated his support of the advice bill put forward by Rep. John Boehner (R-Ohio).
Older and Wiser
Like Secretary of Labor Elaine Chao earlier in the day, Bush touched on baby boomers. He noted that because Americans are living longer, retirement savings would have to accommodate their new life spans.
“Older Americans now require a retirement nest egg large enough for decades of enjoyment and ambition,” he said. “As medicine increases the length of life, adequate savings must increase the options we have on longer lives.”
He noted that the average American worker over 50 is not prepared for retirement with only $40,000 on average in net savings and financial worth. The president said this situation is far worse for minorities and women.
The president also discussed Social Security’s shortcomings by saying that it currently is not helping its beneficiaries.
“Today, Social Security is not a personal savings program,” he said. “Retirees’ benefits are paid directly from the taxes paid each year by current workers. The average return on Social Security is less than 2 percent. And in the long run, Social Security can pay retirees less than 30 percent of what they earned before retiring. And that’s not good enough as we head into the 21st century.”
However, the President said that a solution could be found for this problem by encouraging Americans to learn the power of saving tactics such as compound interest.
“Because there will be an expanding number of retirees
for Social Security to support in the future, we must apply
the power of savings, investing, and compound interest to
the challenges of Social Security by introducing personal
retirement accounts into the system. Americans would own
these assets,” he said. “After all, it is their money.”
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