Plan Guarantees Millions of Americans Safe and Secure Retirements
Proposal for Guaranteed Retirement Accounts Works within Existing Frameworks
New York, New York, March 1, 2016. Economist Teresa Ghilarducci, one of the nation’s leading experts on retirement security, and Blackstone President Hamilton “Tony” James today published their co-authored white paper, “A Comprehensive Plan to Confront the Retirement Savings Crisis,” which outlines a deficit-neutral proposal to ensure that all workers can save enough to retire through mandated, individually-owned, and effectively-invested Guaranteed Retirement Accounts. Left unaddressed, the authors emphasize, the strain of a newly poor population of senior citizens would devastate federal, state, and local budgets for decades to come.
Key components of the plan include:
• Universal coverage: Every American worker would have their own Guaranteed Retirement Account, ensuring consistent retirement savings throughout their career.
• Individually owned, effectively invested: Unlike Social Security, workers maintain ownership over their assets through transparent individual accounts. As with traditional pension plans, their assets will be pooled and invested in long-term, low-fee strategies that generate higher returns than current 401(k) plans.
• Deficit-neutral and costless for families at or below median income: The plan redeploys current tax subsidies more evenly across the income distribution, and creates efficiencies by using existing Federal infrastructure, avoiding a negative impact on the budget.
• Guaranteed lifetime income: Upon retiring, savings will be returned through annuitized payments distributed through existing Social Security infrastructure, guaranteeing a continuous standard of living as long as retirees live.
• Bipartisan appeal: This model keeps accounts under individuals’ control, distributing savings based on the amount invested, not based on income, and without impacting the budget or raising taxes.
“Our retirement system is broken – if we do not take action, America will face rates of poverty among senior citizens not seen since the Great Depression,” said Teresa Ghilarducci, the Bernard L. and Irene Schwartz Professor of Economics at the New School for Social Research and the Director of the Schwartz Center for Economic Policy Analysis and the New School’s Retirement Equity Lab. “Our Retirement Savings Plan is a pragmatic solution that includes no new taxes, will not increase the deficit, and intelligently integrates into existing infrastructure to address this massive issue that cuts across all demographics.”
“Thirty years of investment experience has demonstrated to me time and again the benefits of long-term thinking. Nowhere is this approach more needed than in response to the looming retirement savings crisis,” said Hamilton “Tony” James, President and Chief Operating Officer at Blackstone, one of the world’s leading investment firms. “If the country acts now, we can solve this problem, and solve it relatively painlessly for everyone. Our plan is a simple, sustainable, low-cost and politically viable proposal to enable workers to save and invest more effectively to secure their retirement.”
The publication of this white paper follows the authors’ January 2016 New York Times op-ed, “A Smarter Plan to Make Retirement Savings Last,” in which they wrote, “Our plan would guarantee millions of Americans safe and secure retirements that would benefit them, their families, and the nation’s economy.”
The white paper,“A Comprehensive Plan to Confront the Retirement Savings Crisis,” is available on the website of the Schwartz Center for Economic Policy Analysis
, where Dr. Ghilarducci serves as Director.
About the Schwartz Center for Economic Policy Analysis at the New School
Founded in 1995 by the influential political economist David Gordon, SCEPA is the economic policy research arm of the department of economics at The New School for Social Research. Made possible through a generous gift from Irene and Bernard L. Schwartz, SCEPA is distinct from other economic think tanks by its location within The New School. In the heart of New York City, both the university and center are part of a network of leaders dedicated to progressive and innovative education and ideas.
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