(Editor’s note: This will be one of those very long but very interesting articles full of tidbits of information you need. Please take the time to read the entire article and/or bookmark for later reading and linkage. I am attempting to break this topic of retirement security down into manageable yet related pieces.)
On 10.7.2010, Sen. Tom Harkin held a HELP Committee hearing “to examine retirement security in America”. His full statement from the hearing can be found here. The full video of the hearing can be found here. One of the main witnesses before the committee was Ross Eisenbrey, Vice President, Economic Policy Institute. His full statement can be found here.
EPI has published and advocated what we feel would be an excellent national supplemental retirement plan, the Guaranteed Retirement Account, which was authored by Prof. Teresa Ghilarducci, Director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research. In a nutshell, the GRA would mandate employer and employee contributions to a federally administered cash balance plan. The combined 5% of payroll contributions would be invested by a Thrift Savings Plan-like entity in the bond and stock markets, with a guaranteed minimum return of 3% beyond inflation. A $600 tax credit would cover the entire 2.5% contribution for workers earning $24,000 or less, and greatly reduce the effective contribution rate for other lower-paid workers. We calculate that at the end of a normal working life, the average worker would accumulate, along with Social Security, enough to assure a 70% replacement rate of pre-retirement income. – Ross Eisenbrey
On Social Security:
The trust fund has more than $2 trillion and will be able to pay 100% of promised benefits for another 27 years. Even then, Social Security will not “go broke” but will be able to pay 78% of promised benefits. So the question isn’t how to “save” the program; it will survive without any change. The problem is how to get more money into the trust fund so full benefits can be paid in perpetuity. The goal is, or ought to be, to preserve full benefits and to maximize the retirement income of the tens of millions of households
that depend on Social Security. – Ross Eisenbrey
“For many Americans, the only retirement security they have is Social Security, but that, too, is under siege. There are those that want to privatize the system, cut back benefits and raise the retirement age. They say that everyone should just work longer and that retirement is a ‘luxury.’ Clearly, those people do not swing a hammer for a living. They do not toil in our corn fields or work on our oil rigs. For Americans who work in these physically demanding jobs, working longer simply is not an option. A lifetime of hard work takes its toll, and at some point, a person just cannot do it anymore. – Sen. Tom Harkin on Retirement Security
Would any of this be the case if The Federal Reserve had not devalued our dollar by 96% since its inception in 1913, and given the US Congress a credit card chaining Americans to foreign countries with debt?
THE MAIN PLAYERS
The main players in this little drama are Teresa Ghilarducci and her Guaranteed Retirement Accounts paper, the Economic Policy Institute, SEIU, Retirement USA, and the New School of Social Research.
In his opening statement to the committee, Mr. Eisenbrey stated, “EPI is a non-partisan think tank with a long history of analyzing trends in employment, compensation, and income, as well as advocating for policies to ensure shared prosperity.” After you look at the board for EIP, will you wonder as I did if they are truly non-partisan?