Concerned about the future finances of Social Security and ample evidence that Americans are failing to save enough for retirement, the Bipartisan Policy Center on Wednesday launched a new Personal Savings Initiative.
The BPC, an influential think tank in the nation’s capital, formed a 18-member commission that will exhaustively study the problem and then make policy recommendations for Congress and the Obama administration.
The effort is patterned after similar undertakings regarding long-term fiscal and budget challenges facing the nation, and will be led by former Senate Budget Committee Chairman Kent Conrad, D-ND, and James Lockhart, a former deputy commissioner of the Social Security Administration and former head of the Pension Benefit Guaranty Corp.
“Personal savings have been on a long-term downward trend,” Conrad said at a news conference announcing the initiative, adding that only 38 percent of working-age adults are now contributing into a retirement savings plan.
The lack of savings will tax an already fragile existing retirement system, as both Social Security and Medicare are viewed by experts as being woefully underfunded to face the challenges of coming years. The time to begin addressing the problem is now, said Conrad.
“We believe the day will come, really the day has to come,” he said. “The longer we wait, the more draconian the solution will have to be.”
For the elderly on the lower half of the income ladder, 85 percent of their income comes from Social Security, Lockhart said. A trust fund for federal disability programs, administered by the Social Security Administration, is expected to run dry before this decade is out and Social Security is already paying out more than it takes in, he said.
“That’s something Congress just has to fix,” said Lockhart.
The Personal Savings Initiative wades into a crowded field. A number of universities and think tanks already have important retirement research programs, so the challenge for the center will be not to reinvent the wheel but to come up with action items for Congress and the executive branch that can boost personal savings and retirement security.
Final recommendations are expected in early 2015, and the new effort will include roundtables and issue papers to draw attention to America’s chronic shortfall in retirement savings.
Topics expected to be covered by the new commission include federal policies that either encourage or discourage savings, the tax code, solvency issues regarding government-run retirement programs and the long-term care and financial needs of the elderly.