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February 01, 2012 at 12:59 PM
When it comes to issues that affect Americans’ ability to retire, the jury is still out on what the 2012 presidential election will bring. The retirement industry has its own ideas about what would help Americans save more for retirement, including keeping tax incentives for 401(k) plans and keeping Social Securityintact, but those wishes don’t necessarily mesh with what politicians want.
The Republican candidates for president, Mitt Romney and Newt Gingrich, have struggled to set themselves apart during the primaries. Contentious debates have focused on everything from taxes and the economy to job creation. When it comes to retirement issues, both candidates have been fairly vague.
In his “Believe in America” plan, released last year, Mitt Romney detailed what he hopes to accomplish if he garners the Republican nomination and beats out President Barack Obama in the 2012 election. He stated that he would try to make permanent the lower tax rates for investment income that were put in place by President George W. Bush. Another step would be a “middle class tax savings plan that would enable most Americans to save more for retirement. “
Romney also would try to “eliminate taxation on capital gains, dividends and interest for any taxpayer with an adjusted gross income of under $200,000, helping Americans to prepare for retirement and enjoy the freedom that accompanies financial security. This would encourage more Americans to save and to invest for the long-term, which would in turn free up capital for investment flowing back into the economy and helping to facilitate economic growth.”
Regarding Social Security, Romney said, “First, we must keep the promises made to our current retirees: their Social Security and Medicare benefits should not be affected. But second, we should ensure that the promises that we make to younger generations are promises we can keep. With respect to Social Security, there are a number of options that can be pursued to keep the system solvent—from raising the eligibility age to changing the way benefits are indexed to inflation for high-income retirees. One option that should not be on the table is raising the payroll tax or expanding the base of income to which the tax is applied.”
Gingrich has been very vocal about his plans for Social Security. Toward the end of last year, he announced he wanted to keep the Social Security program intact for older generations, but wanted to give younger people the option of putting that money aside in personal retirement accounts.
He said in an interview with the AARP that he feels strongly that Social Security should remain in its current form, but younger people should have a different option, while keeping the current system as a fall back.
Gingrich believes it wouldn’t take that long for the country to get back to a 4 percent unemployment rate, and if more people are working, they will be putting money back into the Social Security trust fund, which will stabilize it for another 35 or 40 years.
“For most of us, that’s a pretty powerful building block,” he said.
He proposed giving younger generations the opportunity to put their contributions to Social Security in a personal Social Security option, like Chile has, while keeping their employer match to sustain the current system, for managing the transition and sustaining the insurance pool.
“I wouldn’t go in and eliminate Social Security. If you want to take the personal savings account model, and you think it works better for you, we would keep the minimum payment Social Security level as your fall back.”
