by Amy Lillard
Sept 10, 2009 - Taking on low savings rates and poor adoption of employer-provided retirement savings, President Barack Obama highlighted a series of new regulations and new government guidance in his weekly radio address last week.
The Treasury Department and the IRS will now provide incentives for Americans to save with a few new rules and options. In addition, they will provide a “plain English road map” to help Americans better understand existing laws, understand savings, and take advantage of opportunities.
The administration is responding in part to dreary economic figures and statistics on savings. In the last year of the housing market and general economic collapse, Americans lost over $2 trillion from retirement accounts. In addition, while the average American savings rate has increased over the last few months to as much as 5%, according to the Bureau of Economic Analysis, a major gap still exists. The average retirement age for Americans is 62 and life expectancy 77, meaning a significant portion of a lifespan to cover between savings and Social Security. Finally, according to the White House, half of America's workforce doesn't have access to a retirement plan at work, and fewer than 10 percent of those without workplace retirement plans have one of their own.
To prevent a catastrophic drain on Social Security, and help Americans to increase their savings, the new plan calls for additional savings tools and at-work retirement options. The major changes outlined in the new plan include:
Employees will still have the option to opt-out of automatic savings and percentage increases. The new rules do not require congressional action and are therefore in process.
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