Uncle Sam wants YOU to save more funds for retirement. Why?
First, the facts. President Obama announced three ways for you and I to save more retirement funds.
The president wants to make it easier for small businesses to automatically enroll their employees. Next, there is an option for tax refunds to be converted automatically to US savings bonds. Third, if employees have sick or vacation time remaining when leaving a job, they can convert that time to retirement funds.
These stipulations will be enacted without Congress intervention, through the Department of Labor.
At first glance, these may seem to be altrustic moves by the government. Behavioral economics studies indicate that if one is automatically opted in to a retirement fund, they're unlikely to opt out (and vice versa). Certainly it's better for people to have more retirement funds, right? While savings bonds won't exactly turn your retirement dreams to gold, it's good to have more options that aren't the stock market. And regarding the vacation/sick time, again, more retirement funds and more options are positive. Seems like maybe the government is helping us out?
Or maybe our federal government is just watching out for itself, acting more like Big Brother than a big brother.
Maybe the federalis realize that if we individual citizens don't have enough of our own money saved for our own retirements, we will rely on a social security system that, if status quo continues, will be dead soon. When the number of Social Security collectors goes up a record 19% in the 2009 fiscal year, as reported in USA Today, that indicates to me that:
A) Seniors are not finding supplemental income
and/or
B) Seniors want to take advantage of social security while it's still there
What will the government do with millions of hard-working Americans who rely on social security when there is no social security?
It's a classic conservative versus liberal argument. Shall we help the people in rough fiscal circumstances or should they be required to take care of themselves? Should those with sufficient funds be required to support those without sufficient funds?
President Obama also provided a quick sketch of some more possible changes which would require Congressional approval. My personal favorite is automatically opening an IRA for employees at small companies without 401(k)s. Again, Big Brother stuff, and again helpful to the government. But my perspective as a tax-payer and a person who is concentrating on retirement funds, this law would also help me as an individual. Why? Because if more citizens have their own retirement account, chances are less likely that I will have to pay for any one else's retirement with my taxes.
While the retirement funds are still your money, and while it's not difficult to opt-out, these are nanny state proposals. One side of the political spectrum would say stay out of my paycheck, and the other would say we're helping you help yourself before it becomes an emergency. But no matter which side you're on, it's clear that this administration wants you to save, not spend our way to success and happiness. And it's clear that these will benefit the federal government itself, as much or more than individual Americans.
Painting by James Montgommery Flagg