Congress Could Jeopardize Retirement Security for Millions

By Marisabel Torres, Senior Policy Analyst, Wealth-Building Policy Project, NCLR

Photo: http://401kcalculator.org

An upcoming vote in the Senate will determine whether states can help their residents prepare for a time that all workers should have the right to enjoy: retirement. While that seems like a goal Congress should support, the House and Senate already voted to block the Department of Labor (DOL)’s rule allowing cities to establish their own retirement plans. Now, they’re looking to put state plans in jeopardy with a vote on S.J. Res 32.

Many workers recognize that pensions, which used to be a common employee benefit in supporting a robust retirement, are not a guarantee in today’s labor market. And increasingly, neither are employer-sponsored retirement plans like a 401k. Currently, more than 45 percent of working-age households in the United States do not have access to a retirement savings plan through their employer. For Latinos, 60 percent do not have access to an employer-sponsored retirement plan. The city and state plans proposed would provide auto-enrollment Individual Retirement Accounts (IRAs) for private sector workers who tend to be lower-income, and don’t have access to such benefits through their employers. This would also benefit employees of small businesses, where 50 percent of employers don’t offer retirement plans. Workers who participate are automatically opted in to a retirement savings account that takes out a predetermined amount from their monthly paychecks and saves it in an IRA. Workers also have the option to opt out at any time.

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Congress: Don’t Turn Your Back on Workers Struggling to Save for Retirement

By Yuqi Wang, Policy Analyst, Economic Policy Project, NCLR

Social Security is widely recognized as playing an important role in workers’ retirement security. In 2015 alone, Social Security benefits kept 22 million retirees out of poverty, and more than 60% of elderly beneficiaries relied on Social Security for most of their retirement cash income.

To celebrate National Social Security Month this April, the Social Security Administration created an online guide that workers can use to learn more about the program and its benefits.

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House Votes to Strip Retirement Savings from Millions of Americans

Photo: www.aag.com, http://ow.ly/IYcvj

Hardworking Latinos took another hit from the Republican-led Congress this week when the House of Representatives voted to overturn Department of Labor regulations that support state efforts to provide retirement programs to private sector workers.

“We are disappointed that members of Congress have voted against the financial security of millions of Americans. In California alone, the Secure Choice program that was voted into law last year with bipartisan support would help connect 7.5 million workers—half of whom are Latino—to a retirement savings account,” said Eric Rodriguez, NCLR’s Vice President of the Office of Research, Advocacy, and Legislation.

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New DOL Regulation Will Help Savers Protect Themselves

Senior woman cookingIf you are saving for retirement or plan to do so in the future, a new regulation will help protect your hard-earned savings!

On Wednesday, the Department of Labor updated the definition of retirement investment advice and closed loopholes that permit some retirement investors to steer clients into investment products that aren’t in their best interest. Now, anyone offering individualized retirement investment advice must act under a fiduciary standard, meaning they must provide impartial advice in their client’s best interest. It is good news for Latinos and other small savers, as they are least able to absorb the shock of increased fees and decreased returns often seen with conflicted retirement investment advice.

Many Americans struggle to save enough for retirement. Latinos have the smallest retirement account balances of any group and often lack access to employer-sponsored retirement savings plans. They are also much younger than the general population, and as more enter the workforce—expected to comprise 18.6% of the labor force by 2020—it is essential that the retirement savings environment ensures the security of their nest egg and minimizes retirement account losses due to high fees and low returns on investments.

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Take a Step Toward a More Secure Financial Future with myRA

If you don’t have access to a retirement savings plan at work, you’re not alone. According to a new report from the Pew Charitable Trusts, more than 30 million full-time employees in the United States are in the same situation.

Research shows that the Hispanic population has been particularly affected by the retirement savings crisis. According to Pew, 62 percent of Hispanic workers don’t have access to retirement savings plans through their employers, compared to 37 percent of White non-Hispanic workers.

Lack of access to a workplace savings plan isn’t the only barrier to saving. High fees, complicated investment options, and fear of losing money can also get in the way.

To help address the retirement savings crisis in America and make it easy for people to start saving, the U.S. Department of the Treasury developed myRA®. This new retirement savings account costs nothing to open, has no fees, and carries no risk of losing money. It was designed for people who don’t have access to a retirement savings plan through work and are looking for a simple, safe, and affordable way to start saving for the future.

“It is important for me because it’s my future.”

myRA_pic1Mariela Ortiz is an employee at Coral Gables La Salle Cleaners near Miami. She came to the United States from Cuba 15 years ago and has worked multiple jobs over the years to support her two sons.

Mariela has been thinking about saving for a long time, but getting started has been difficult since she doesn’t have access to a workplace-sponsored plan. She decided to open a myRA account after her human resources manager told her about the program. With the help of Spanish-speaking myRA representatives, the process to open an account was easy.

Since opening an account, Mariela has been saving a small amount from her paycheck each week. She finds comfort in knowing myRA is backed by the U.S. Treasury, that accounts won’t lose money, and that she’s taking steps to save for retirement. “It is important for me because it’s my future,” she says.

America Saves Week is the perfect time to start saving

 America Saves Week (February 22–27) is a great time to start thinking about your financial future by taking the myRA 10-5-1 Retirement Savings Challenge. It’s simple:

  • 10 minutes: That’s how long it takes to open a myRA account online at myRA.gov. To make sure the sign-up process goes smoothly, have your social security number, driver’s license or other ID, and the name and birthdate of at least one beneficiary on hand.
  • $5 per pay period: Deposit at least $5 per paycheck into the account. It’s a small amount, but it adds up. You can contribute to your myRA account via direct deposit through your employer or from your personal checking or savings account. Consider setting up regular contributions; they make saving automatic, so you can set them up and then forget about them.
  • 1 step in the right direction: That’s it! You’ve taken the first step toward a better financial future, and your retirement savings account is ready to continue growing. Down the line, you can boost your savings by increasing the amount you save from each paycheck or by making one-time contributions, like from your federal tax refund.

During America Saves Week, take control of your financial future with myRA. To learn more, visit myRA.gov.