Putnam Investments CEO Bob Reynolds has not been shy about pushing to fix America’s broken retirement savings system. And now, he’s offering three steps that could shore up retirement security while conducting an online campaign to keep the conversation going on retirement security in the U.S.
Believing that today’s retirement savings challenge is too big for any one company or industry to solve, Reynolds has launched a Retirement Savings Challenge that asks people to comment on America’s existing workplace savings plans “because we believe they can become a more reliable foundation for our nation’s retirement system.”
This isn’t the first time that Reynolds has urged Americans to engage in the retirement debate. In May 2012 at a retirement security benefit forum in Washington sponsored by the Financial Services Roundtable, he said that though tax reform would be a top priority in 2013, both retirement planning officials and average Americans must press lawmakers also to put Social Security reform on top of their list.
“We should engage in a full debate [with lawmakers] on ways to make Social Security solvent,” Reynolds said at the time.
Now, along with his Twitter feed, @RobertLReynolds, where he offers his thoughts on retirement security and the latest Putnam research, Reynolds is blogging regularly about issues such as savings access for all workers, how rising health care costs shape retirement planning and auto-enrollment features in 401(k) plans.
On the following page, read Reynolds’ thoughts on three steps that could shore up retirement security.
Noting that “strengthening America’s retirement system should have been a higher priority for years before 76 million baby boomers began to retire,” Putnam CEO Bob Reynolds asserts in a blog post that nearly all American workers can improve their retirement preparedness with these three steps:
- Full-auto approach for all workplace savings. “Make the best practices endorsed by the Pension Protection Act of 2006 the new norm for all workplace savings plans,” Reynolds advises. A full-auto approach would mean all automatic features for all workplace savings plans, including automatic enrollment, re-enrollment, escalation and default to qualified funds.
- Access to workplace savings for all workers. “Any worker paying FICA taxes should have access to a retirement savings plan at work,” Reynolds writes. “Let’s support the Auto-IRA, a bipartisan idea that was reintroduced into Congress this year, requiring all employers to offer, at a minimum, a payroll-deduction IRA with an opt-out provision for workers.”
- Raise the bar on deferral rates. The Lifetime Income Score survey found that the most successful savers, meaning the people who are on track to replace 100% or more of their current income in retirement, are those who actively participate in a savings plan at work and save 10% or more of their salary.
Sluggish wage growth, Reynolds acknowledges, deters workers from saving more. But he believes that workers should be encouraged to set realistic expectations about retirement — and auto-escalation can help them achieve their retirement savings goals.
“The infrastructure that exists today represents a combination of ideas from the retirement industry, private individuals, advocates, and public policymakers. It is a joint effort like this — in a coordinated, full-court press — that is needed to take America’s retirement savings system to the next level,” Reynolds concludes.
Read 7 Things Your Clients Need to Know About Retirement: Harold Evensky at ThinkAdvisor.