Oregon has become the latest state, that’s state, to force most employers to offer a state-run Roth IRA. Workers will automatically be enrolled at 5% of earnings unless they opt out.
According to Market Watch: The U.S. isn’t even in the Top 10 (of countries with best retirement security) That’s in part because the highest-ranked countries — Norway, Switzerland and Iceland are Nos. 1, 2 and 3 respectively — all have a strong three-legged retirement stool for citizens to rest on, says Edward Farrington, executive vice president of retirement strategies in the U.S. for Natixis Global Asset Management.
Wait a minute, the US has a multitude of retirement savings vehicles. First, many employers, including all state governments, offer some form of retirement savings vehicle even while many small employers do not. But the federal government already has in place the my myRA and other vehicles as well. There are plenty of tax-favored ways for Americans to save. Why do we need more government intervention?
While it is true the traditional pension plan has nearly disappeared, it is also true the majority of Americans never had such a benefit. The US has the three-legged stool in place. It’s an employer plan or self-funded tax advantaged retirement vehicle, Social Security which delivers 40% or more income replacement for the average worker and personal savings.
The average incomes in the above countries are not significantly different from the US while they have a higher cost of living. So what is the real problem? Perhaps it’s things like the US household savings rate is half that in the EU country area.
As usual, politicians are aiming at the wrong target and ignoring what typically is the primary cause of most of our social related problems; lack of personal responsibility and poor, short-term life choices.
We can have all the gimmicks and savings vehicles we want. Nothing will change until we change our culture and people accept that savings comes first and ones standard of living is then based on what is left … no exceptions.