President Obama announces new regulations coming to encourage state-by-state retirement plans
A retirement crisis is rapidly building across the land—a huge percentage of “baby boomers” will receive solely Social Security, and may slip below the Federal poverty line when they finally retire. The following generations may have an even more difficult time as good Union and public sector defined benefit pensions continue to be pounded by corporate voices and politicians.
The best solution to this crisis is simply to raise the amounts contributed by the wealthy to the Social Security Fund—right now, no income above $118,500 a year is taxed for Social Security. The Fund will have surpluses for another few decades, no problem, but taking that “cap” off the income taxed for Social Security would keep it filled ad infinitum. Yes, simply tax all the incomes of Bill Gates, Warren Buffett and the rest of the super rich, instead of just the first $118,500, and Social Security is fixed.
But in this new Gilded Age of Robber Barons who use the Citizens’ United decision to buy the political arena, this seems too difficult. Next best?
President Obama has just ordered that regulations be promulgated to make it easy for States to create retirement plans which will allow workers to have automatic wage deductions poured into IRA’s (Individual Retirement Accounts), so they have something set aside for the future. The President acknowledges this is an imperfect solution, but he announced that since Congress refuses to do anything to address this crisis, the Federal government has to make it as easy as possible for States to address the problem.
Here in California, legislation has created the California Secure Choice Retirement Investment Board (CSCRIB), to plan and create a plan for all workers without employer-provided pensions (currently about 6.3 million employees), which would allow them to have pre-tax wages automatically deducted and put into their own IRA’s.
Stay tuned for further developments—it’s what President Clinton used to call “not letting the perfect stand in the way of the good”—if we cannot yet organize all California’s workers into Unions with good defined benefit plans, perhaps we can at least create a system that encourages workers to set aside a few percent of their wages every week, so they are not destined for poverty in their old age.
By Bill Sokol | August 13, 2015