The U.S. retirement system is in need of a major overhaul, according to a new report from the Government Accountability Office, which is calling on Congress to establish an independent commission that will not just analyze the situation but also recommend changes to promote retirement security. “A comprehensive re-evaluation is needed,” according to the report.
With that in mind, the GAO suggests that the commission include representatives from government agencies, employers, the financial services industry, unions, participant advocates and researchers.
“It has been nearly 40 years since there has been a comprehensive federal evaluation of the nation’s approach to financing retirement and the time has come for a new examination,” said Gene L. Dodaro, Comptroller General of the United States and head of the GAO.
(Related: How to Fix Social Security: Alicia Munnell)
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According to the GAO report, each of the three primary pillars supporting the U.S. retirement system — Social Security, employer-sponsored pension or retirement savings plans and individual savings — have experienced dramatic changes over the past 40 years. If they’re not addressed, many Americans could suffer an insecure and undignified retirement.
Those changes include a shift away from defined benefit defined contribution plans which increases the responsibility and risk for individuals; increases in debt and health care costs, which make it hard for individuals to save; and demographic changes which reduce the ability Social Security to pay full benefits beginning in 2035.