Is the Government fixing the retirement mess in America or just creating optics?
Statistic after statistic shows that Americans are not even remotely ready for retirement, don't have adequate emergency funds, living paycheck to paycheck, not saving enough, and dealing with tons of debt. Yet, in a recent CNBC poll revealed that 75% of Americans reportedly handle their finances on their own with only 17% seeking help from a financial professional. So, what is the answer? Let the politicians fix it. Thus, the politicians are working on legislation to address the problem and they aren't even in the ballpark with their solutions.
They believe in ideas such as automatically enrolling new employees in a 401 K plan is the answer. Forcing Americans to save 3% of their income in their 401 K plans. Placing incentives for small businesses to set up retirement plans for workers. They see the problem as the worker doesn't have the opportunity to save money because there is no retirement plan. That still does not remotely solve the problem... however they are creating the optics that something is being done.
People have access to retirement plans. They are called IRA's. However, they chose not to use them. If someone wants to save and invest beyond what they can put into an IRA then they can set up alternative investment plans.
Automatic enrollment or forcing someone to set up a retirement plan is not the answer. That is just one more example of government intervening into our lives.
Forcing people to save 3% into a retirement plan doesn't even begin to scratch the surface. Yes, it will accumulate to something over a 20 to 30 year period. However, not even remotely enough to create a secure retirement.
Then the politicians are proposing they change the age where you are required to take money out of your IRA from 70 1/2 to age 72 1/2. Where does that solve the problem? Then my favorite one. They want to remove the age limit for people to invest in IRA. Where does investing into an IRA into your 80's and 90's actually solve any problems?
Do these politicians really put time into figuring out the solutions to these problems? How about fixing the social security system that so many people will depend upon. After all, we have paid into it for a lifetime. Once that bankrupts then we really have a problem. If the politicians want to fix the retirement problem in America, they need to go a different direction versus creating the optics that they are providing solutions.