Yesterday, economics professor Christian Weller spoke at the Center for American Progress about his new book Retirement on the Rocks. His book presents a detailed look at the retirement crisis facing Americans. Not only does he diagnose the problem, but he offers solutions to the imminent crisis.
Weller says many Americans today are “muddling through retirement,” with roughly 52 percent of Americans expecting to make substantial cuts to their spending in retirement due to a lack of retirement savings. People are doing everything they can to tread water, but suggesting the savings crisis lies solely with individuals is misguided. The looming retirement crisis is a policy failure and, therefore, can be corrected with better policy.
The retirement crisis is also a result of structural changes in the economy. Frozen wages, declining employee benefits, and stock market bubbles have all contributed to the retirement crisis. Furthermore, existing tax incentives for saving are poorly targeted, often helping those who need it the least.
What should we do? Weller has several suggestions. Protecting and maintaining existing defined benefit pensions- in both the public and private sectors- is certainly one priority. Weller bemoans the decline in defined benefit plans, especially in the private sector. Policymakers could also reform existing tax incentives for saving to make them more effective and more targeted toward low-income Americans, who need the most help. Finally, Weller also supports the idea of a “Universal Savings Credit”, an idea he has written about previously.