U.S. Retirement Policy Considerations for the 21st Century

Abstract

Despite a lively debate over whether U.S. workers face a retirement crisis, no one denies that facets of our retirement system could be improved. A constructive discussion should focus on who is at risk and what policies might ameliorate the problems they face. To the extent that older workers have inadequate saving to meet their retirement needs, proposals to increase savings rates would likely offer little relief. For low earners, who are particularly at risk, higher savings rates may impose real hardship and may be ineffective in ameliorating retiree poverty. Home health care and long-term care expenses pose a special risk to people who live to advanced ages, but this is largely a problem of insurance rather than retirement saving inadequacy. Bolstering Social Security for low earners is the surest way to provide them retirement income security. Widening retirement savings opportunities for workers through broader employer sponsorship of plans with modern behavioral features that encourage participation, reasonable savings levels, and efficient investment opportunities will improve the retirement security of other segments of the workforce.