[Senate Hearing 111-49]
[From the U.S. Government Publishing Office]
S. Hrg. 111-49
BOOMER BUST? SECURING RETIREMENT IN A VOLATILE ECONOMY
=======================================================================
HEARING
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
__________
FEBRUARY 25, 2009
__________
Serial No. 111-1
Printed for the use of the Special Committee on Aging
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
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SPECIAL COMMITTEE ON AGING
HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon MEL MARTINEZ, Florida
BLANCHE L. LINCOLN, Arkansas RICHARD SHELBY, Alabama
EVAN BAYH, Indiana SUSAN COLLINS, Maine
BILL NELSON, Florida BOB CORKER, Tennessee
ROBERT P. CASEY, Jr, Pennsylvania ORRIN HATCH, Utah
CLAIRE McCASKILL, Missouri SAM BROWNBACK, Kansas
SHELDON WHITEHOUSE, Rhode Island LINDSEY GRAHAM, South Carolina
MARK UDALL, Colorado
KIRSTEN GILLIBRAND, New York
MICHAEL BENNET, Colorado
ARLEN SPECTER, Pennsylvania
Debra Whitman, Majority Staff Director
Michael Bassett, Ranking Member Staff Director
(ii)
C O N T E N T S
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Page
Opening Statement of Senator Herb Kohl........................... 1
Statement of Senator Mel Martinez................................ 2
Statement of Senator Robert P. Casey, Jr......................... 6
Statement of Senator Mark Udall.................................. 6
Statement of Senator Blanche Lincoln............................. 7
Panel I
Statement of Jeanine Cook, Baby Boomer, Myrtle Beach, SC......... 8
Statement of Dallas L. Salisbury, President and CEO, Employee
Benefits Research Institute, Washington, DC.................... 12
Statement of Dean Baker, Co-Director, Center for Economic and
Policy Research, Washington, DC................................ 45
Statement of Ignacio Salazar, President and CEO, Ser-Jobs for
Progress, Washington, DC....................................... 51
Statement of Barbara B. Kennelly, President and CEO, National
Committee to Preserve Social Security and Medicare, Washington,
DC............................................................. 55
Statement of Deena Katz, CFP, Associate Professor, Texas Tech
University, and Chairman, Evensky & Katz, Coral Gables, FL..... 62
APPENDIX
Written Testimony submitted by Thomas M. Shapiro, Ph.D.,
Director, Institute on Assets and Social Policy Pokross
Profressor of Law and Social Policy, Brandeis University....... 89
Statement by Mellody Hobson, President, Ariel Investments, LLC
and Chairman Ariel Mutual Funds Board of Trustees.............. 90
Statement submitted by Women's Institute for a Secure Retirement
(WISER)........................................................ 92
Written Testimony submitted by Richard W. Johnson, Senior Fellow,
The Urban Institute............................................ 96
Statement from Matthew D. Hutcheson, Independent Pension
Fiduciary...................................................... 105
Statement from the American Benefits Council..................... 115
Information submitted by Joseph C. Nagengast, Target Date
Analytics...................................................... 135
Information submitted by Institute on Assets and Social Policy... 151
The Ariel-Schwab Black Paper..................................... 176
(iii)
BOOMER BUST? SECURING RETIREMENT IN A VOLATILE ECONOMY
---------- --
WEDNESDAY, FEBRUARY 25, 2009
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The Committee met, pursuant to notice, at 10:35 a.m. in
room SD-106, Dirksen Senate Office Building, Hon. Herb Kohl,
Chairman of the Committee, presiding.
Present: Senators Kohl [presiding], Lincoln, Casey,
Whitehouse, Udall, Gillibrand, Martinez and Specter.
Index: Senators Kohl, Martinez, Casey, Udall, and Lincoln.
OPENING STATEMENT OF SENATOR HERB KOHL
The Chairman. Good morning to everyone. Thank you for being
here, first and foremost. I would like to extend a warm welcome
to Senator Mel Martinez, the Aging Committee's new ranking
member, hailing from the great State of Florida. He is no
stranger to the constituency we serve, and the issues we
confront.
I'm so pleased to join together with Ranking Member Mel
Martinez in leading this Committee, and I'm confident that he
and his staff will contribute greatly to the Committee's
agenda.
With the country aging at a rate never seen before, the
issues that come before this Committee are timely, urgent and
ever-changing. Just two years ago this month, we held a hearing
to examine how the onslaught of baby boomer retirees would
affect our, then robust, economy.
But what a difference two years can make. Today we will
turn that issue on its head as we examine how the now flailing
economy is affecting baby boomers.
For the millions of Americans who thought they were on the
precipice of retirement, a dark cloud has rolled in and
obscured the golden years they were just beginning to see over
the horizon.
This morning, we will hear from a woman whose struggles
typifies those that many boomers are now experiencing. She is
not alone. Over the past year, 401K plans and other defined
contribution participants have experienced devastating losses.
In these hard times, American companies have also had to
cut back benefits. Thousands of American employers, large and
small, have stopped providing 401K plans, 401K matching
contributions to their employees. With the volatility in the
stock market, many Americans are left wondering whether they
should continue investing in their 401K at all.
The answer is yes, they should continue to save for their
retirement, but perhaps with updated strategies, and more
reliable investments. That is why, with more and more Americans
relying on 401Ks and other defined contribution plans as their
primary source for retirement savings, we need to make sure
their savings are well protected with strong oversight and
regulation.
In the past, this Committee has called for the disclosure
of 401K fees to employers and participants and a ban on ill-
conceived products like the 401K debit card.
Today, we will take a close look at 401K target day funds,
which are designed to gradually shifts to more conservative
investments, as workers approach their retirement.
A Committee investigation of investment funds designed for
people planning to retire in 2010 has found that there's a wide
variety of stock exposure. The results of excessive risk can be
devastating for those on the brink of retirement. One 2010 fund
lost 41 percent in 2008.
Despite their growing popularity, there are absolutely no
regulations regarding the composition of these funds. I've sent
letters to Secretary Linda, Holly Solis, and U.S. Securities
and Exchange Commission Chairman, Mary Shapiro, asking them to
consider regulations to better define target date funds.
Depending upon their response, I may consider legislation
options, as well.
Today's hearing will also focus on the housing downturn,
and its affects on seniors and retirees, so many Americans who
were counting on the value of their home to provide a secure
retirement, are now at a loss and wondering what to do.
The result is that older Americans are forced to consider
all their options. For many of them, the economic downturn will
mean working longer. One of our witnesses today will describe
the labor market for older workers, and the challenges they
face.
To confront those challenges, I'm introducing several
pieces of legislation this week that would make it easier for
older Americans to continue working past retirement age.
Finally, experts will share with the Committee how boomers
should move forward with a revised plan to shore up their
retirement savings. Now, more than in recent decades, older
Americans will need to rely on our bedrock government programs
like social security and Medicare, and many may find some
relief from provisions passed in the recent stimulus package.
None of us can say when we will see the end of this
economic downturn. The best we can do is to reassess,
reallocate, and recommit to finding stability in a volatile
economy.
We thank the witnesses for being with us today, and we now
turn to Ranking Member Martinez for his statement.
STATEMENT OF SENATOR MEL MARTINEZ
Senator Martinez. Mr. Chairman, thank you so very much, and
thank you for your very kind welcome to the Committee. I really
have looked forward to working with you. I have been a very
interested member of the Committee, and now as a--in a position
of ranking member--it's a real honor to work with you, and a
pleasure, and I know there's so much that working together, we
can accomplish for the good of the American people,
particularly those--the aging population of our country.
I want to thank our panelists for coming today to join us
on this very important topic of the issues impacting America's
baby boomer and retiree generation. One of the greatest
concerns of these Americans is the current financial crisis,
and what it meant for their future. From losses in the stock
market to declining home values, those focused on retirement
are right to be concerned about their financial future.
According to the Employee Benefit Research Institute,
Americans aged 55 to 64, who have been enrolled in a program
for 20 years or more, saw the value of their 401K retirement
account decline by an average of 20 percent this year.
One consequence of the worsening economy, is that an
increasing number of Americans have had to put retirement on
hold. According to a recent AARP study, an estimated 70 percent
of employee 62 and older plan to continue working. Numbers from
the Bureau of Labor Statistics also suggest this trend. The
number of Americans 55 and older with full-time jobs increased
from 15.5 million in 2005, to almost 18 million in 2008.
Another concern among baby boomers and retirees is the
state of the housing market. For many Americans, a home is the
largest investment a family will make. As widespread
foreclosures continue to take a direct toll on families, the
value of nearby homes is also negatively affected. This is a
huge concern for seniors looking to downsize their homes, and
use the proceeds of a home sale to help with their retirement.
Every American should have the opportunity to live
comfortably after retirement. Through some financial planning,
aging Americans can better plan for their future, by learning
ways to save enough to enjoy retirement. I have talked to a
number of these individuals in my home State of Florida, where
an estimated 17 percent of the residents are 65 and older,
compared to 12 percent of the nation, as a whole.
Among the top concerns for financial security--preparing to
live on a fixed income, paying healthcare and hospital bills,
and finding affordable housing during retirement. I look
forward to working with Chairman Kohl to develop practical
solutions to help aging Americans weather the current storm,
and prepare for some of the challenges that lie ahead.
I also look forward to hearing from our experts joining us
today, here. One of our experts will discuss the importance of
entitlement reform, which I believe is necessary to ensure the
availability of programs vital to seniors. Programs such as
Medicare, Medicaid, and Social Security could be rendered
insolvent, if Congress fails to act.
To address this problem, I support the Conrad-Gregg bill
that would help Congress and the President find the political
will to address the nation's long-term fiscal imbalances. The
bill would establish a task force that would recommend changes
to current law related to spending and taxes, especially on
entitlement programs.
The task force will consist of equal number of an equal
number of Republicans and Democrats, and two members from the
Administration. This effort will ensure bipartisan solutions to
entitlement reform, and long-term fiscal stability.
The plan the task force sends to Congress will require a
super-majority for passage, meaning that we would truly reach a
bipartisan solution to one of the most vexing issues facing our
nation today. Decisions on entitlement solvency have been
delayed for far too long.
I want to thank the panel for being here today, and for
joining us to lend your expertise to these serious problems
that we face. I know that from your information that you will
share, we will be better informed, and better able to guide
legislation that will need to be looking at the entirety of the
landscape that we face today, which is so different than what
we have had in year's past. Oh, thank you for being here, I
look forward to hearing from you.
[The prepared statement of Senator Martinez follows:]
Prepared Statement of Senator Mel Martinez
Thank you Chairman Kohl. It gives me great pleasure to take
part in my first Aging Committee Hearing as Ranking Member. I
would like to thank our panelists for joining us today to
discuss several issues impacting America's Baby Boomers and
retirees.
Among the greatest concerns of these Americans is the
current financial crisis and what it means for their future.
From losses in the stock market to declining home values, those
focused on retirement are right to be concerned about their
financial future. According to the Employee Benefit Research
Institute, Americans age 55 to 64 who have been enrolled in a
program for 20 years or more saw the value of their 401k
retirement accounts decline by an average of 20 percent last
year.
One consequence of the worsening economy is that an
increasing number of Americans have had to put retirement on
hold. According to a recent AARP study, an estimated 70 percent
of employees 62 and older plan to continue working.
Numbers from the Bureau of Labor Statistics also support
this trend. The number of Americans 55 and older with full-time
jobs increased from 15.5 million in 2005 to 17.9 million in
2008.
Another concern among Baby Boomers and retirees is the
state of the housing market. For many Americans, a home is the
largest investment a family will make. As widespread
foreclosures continue to take a direct toll on families, the
value of nearby homes is also negatively affected. This is a
huge concern for seniors looking to downsize their homes, and
use the proceeds of a home sale to help with retirement.
Every American should have the opportunity to live a
comfortable life after retirement. Through sound financial
planning, aging Americans can better plan for their future by
learning ways to save enough and enjoy retirement. I have
talked to a number of these individuals in my home state of
Florida, where an estimated 17 percent of the residents are 65
and older, compared to 12 percent of the nation as a whole.
Among their top concerns is financial security--preparing to
live on a fixed income, paying health care and hospital bills,
and finding affordable housing during retirement.
I look forward to working with Chairman Kohl to develop
practical solutions to help aging Americans weather the current
storm and prepare for some of the challenges that lie ahead.
I also look forward to hearing from our experts joining us
here today. One of our experts will discuss the importance of
entitlement reform, which I believe is necessary to ensure the
availability of program vital to seniors. Programs such as
Medicare, Medicaid, and Social Security could be rendered
insolvent if Congress fails to act.
To address this problem, I support the Conrad-Gregg bill
that would help Congress and the President find the political
will to address the nation's long-term fiscal imbalances. The
bill would establish a task force that will recommend changes
to current law related to spending and taxes, especially on
entitlement programs.
The task force will consist of equal Republicans and
Democrats, and two members from the Administration. This effort
will ensure a bipartisan solution to entitlement reform and
long-term fiscal stability.
The plan the task force sends to Congress would require a
supermajority for passage meaning we would truly reach a
bipartisan solution to one of the most vexing issues facing our
nation today. Decisions on entitlement solvency have been
delayed for that too long. This bill will force Congress to
vote on a bipartisan plan to make sure that future generations
do not bear an incredible burden on debt.
So I want to thank our panel of experts for joining us
today, and I look forward to hearing your thoughts on how we
might better prepare this critical group of Americans for the
challenges presented by today's turbulent economy.
The Chairman. Thank you very much, Senator Martinez.
We're very pleased to welcome our panel today. Our first
witness will be Jeanine Cook.
Mrs. Cook has worked as a business agent for SEIU Local 47,
in Cleveland, OH, and for the United Way of Lake County. She
was active in a variety of charity organizations in the
Cleveland area, before recently moving to Myrtle Beach, SC. She
will testify about the challenges boomers are facing as they
transition toward retirement.
Our second witness will be Dallas Salisbury, the CEO and
President of the Employee Benefit Research Institute. Mr.
Salisbury has written and lectured extensively on economic
security topics, winning several awards for his professional
excellence. He has served on the ERISA Advisory Council, and
the PBGC Advisory Committee, the U.S. Advisory Panel on
Medicare Education, as well as the Board of Directors of the
National Academy of Social Insurance.
Also joining us today is Dean Baker. Mr. Baker is the co-
director of the Center for Economic and Policy Research. His
analysis economic issues is frequently cited in major media
outlets, and he was one of the leading economists warning of a
housing bubble. Today, he is releasing a new report analyzing
the effects of the housing downturn on baby boomers.
Next, we will be hearing from Ignacio Salazar. Mr. Salazar
is the head of SER--Jobs for Progress, an organization that
trains low-income, older Americans in over 18 States, including
my own State of Wisconsin. He will share with us the challenges
and opportunities for those who may want to or need to continue
working.
He's a previous President of the Detroit, MI affiliate of
SER, and has had leadership positions with several Detroit non-
profits.
Barbara Kennelly is our next witness. She is currently the
President and CEO of the National Committee to Preserve Social
Security and Medicare. She has spent 25 years serving the
citizens of Connecticut at local, State, and Federal levels,
including 17 years as a member of the U.S. Congress.
We welcome you all here today, we look forward to your
testimony, and I would like to ask Senator Martinez to
introduce our last witness.
Senator Martinez. Thank you very much, Mr. Chairman.
I would like to say a few words about Deena Katz who is an
Associate Professor in the Personal Financial Planning Division
at the Texas Tech University in Lovett, TX. Deena is an
internationally recognized financial advisor and practice
management expert, the author of six books on financial
planning and practice management topics, and a frequent guest
on local and national network programs for CBS, ABC and PBS.
Deena, thank you for being with us today.
The Chairman. Thank you.
Before we commence our testimony, I'd like to ask Senator
Casey to make a few comments, if he wishes.
STATEMENT OF SENATOR ROBERT P. CASEY, JR.
Senator Casey. Mr. Chairman, thank you very much, I
appreciate you calling this hearing, and appreciate the
presence of the new ranking member, Senator Martinez.
I won't be here for the entire hearing, and I wanted to
make sure that it was stated on the record. I'll be here for a
limited period of time, but I want to thank the witnesses for
your presence here today, for the commitment that you bring to
all of these issues that come under, I guess, a broad umbrella
of retirement security, especially at this time in our nation's
history.
I know that in the State of Pennsylvania, where we have the
second-highest percentage of people over the age of 65, other
than the ranking member's home State, I know how worried people
are. I have some sense of the anxiety that they feel, and this
issue is critically important--not only for our State, but for
the country.
We have an obligation in the Congress, in both parties, to
do everything we can to provide some peace of mind that comes
with retirement security for those who fought our wars, or
worked in our factories, or taught our children, or gave us
life and love, and today's testimony that you will provide--and
the passion and scholarship and experience you bring to that
testimony--will inform us and will keep us focused on making
sure that we're doing everything possible, especially at a time
of this trauma--economic trauma--for our families, that we stay
focused on the urgent question of retirement security.
So, we're grateful for your presence and for your work
here, and we will make sure even if we're not here for the
whole hearing that we review, and try to incorporate the
testimony in our work. Thank you very much.
The Chairman. Thank you, Senator Casey.
Senator Udall.
STATEMENT OF SENATOR MARK UDALL
Senator Udall. Thank you, Mr. Chairman, I'll be brief. I,
too, want to let it be known that I'm particularly honored to
be a member of your Committee, and the ranking member, as well.
I want to associate myself with the fine words of you and
Senator Martinez, and Senator Casey. I don't think I can
improve on them.
I do have a statement, I would like to ask unanimous
consent that I can include in the record. Again, I look forward
to working with you, Mr. Chairman, to understand and then act
in ways that are appropriate to ensure retirement security, and
be an active and involved member of this Committee.
So, thank you.
[The prepared statement of Senator Udall follows:]
Prepared Statement of Senator Mark Udall
First, I would like to thank Chairman Kohl and Ranking
Member Martinez for holding this hearing today. I am pleased to
have the opportunity to serve as a member of the Special
Committee on Aging. With millions of baby boomers reaching
retirement age, issues facing older Americans continue to be
important to the people in my home state of Colorado and across
the country. I look forward to bridging the divide and working
with the members of the Committee on both sides of the aisle to
address policies that will improve the lives of older
Americans.
The state of our nation's economy is at the forefront of
people's minds. I have heard from many Coloradans greatly
concerned about the economic crisis facing all of us. The
volatility and uncertainty of these distressed economic times
have left people fearful of losing their jobs, their homes and
their life savings. Older Americans, who worked hard and
planned for the future, are faced with the reality of
diminishing funds for retirement. Increasingly, they are being
forced to reenter the workforce--into a growingly difficult job
market--to make ends meet.
Additionally, the baby boom generation is quickly
approaching retirement age, and in the coming years, millions
of Americans will begin receiving Social Security funds and
drawing on their pensions and retirement savings. In recent
months, as the stock market has plummeted, these boomers have
watched their nest eggs shrink, and as housing prices tumbled,
they have experienced decreasing equity in their homes. Due to
these financial constraints, they are faced with tough choices,
such as delaying retirement. Many are seeking guidance on the
best ways to protect their pensions, manage their 401(k)s and
ensure that they are financially secure when they reach
retirement.
This hearing is timely, and I look forward to the testimony
of the witnesses today. I hope to learn not only more about the
scope of the issue, but I am seeking solutions to share with
Coloradans affected by these challenges.
The Chairman. Thank you, Senator Udall.
Senator Lincoln.
STATEMENT OF SENATOR BLANCHE LINCOLN
Senator Lincoln. Mr. Chairman, thank you once again--as
always--bringing up such great issues for us to focus on, and
we appreciate so much--we appreciate the panel being here to
share your wisdom and background, in terms of retirement
security.
I noticed, at dinner the other night, my husband looked at
my kids and said, ``Ya'll got to get to basketball practice,
because we may need a scholarship.'' When you look at what's
happened to people's savings in so many ways--whether it's for
college, or retirement, or anything else--people are
frightened, and there's lots to be done. We're all going to be
working hard to make sure we turn our economy around, so all of
those things do prove out to be a good and positive thing.
We're looking forward to having your suggestions of how we can
ensure the confidence that Americans need in their retirement
security.
So, thank you, Mr. Chairman, and thanks to all of you all.
We appreciate it.
The Chairman. Thank you, Senator Lincoln.
So, we will now turn to Jeanine Cook, and for your
statements, if you would be so kind as to keep them to 5
minutes.
Jeanine Cook.
STATEMENT OF JEANINE COOK, BABY BOOMER, MYRTLE BEACH, SC
Ms. Cook. Thank you.
Chairman Kohl, Ranking Member Martinez, and distinguished
member of the Committee, my name is Jeanine Cook, and I would
like to tell my story. It's a very personal story, and bear
with me.
I am 58 years old, and have been married for 36 years. My
husband Robert and I lived in our home in Ohio for 33 of those
years. My husband retired last July at age 61, he has severe
heart damage; half of his heart is functioning. He also is an
insulin diabetic.
Robert served in the United States Marine Corps for 8
years, then he worked for the Gould Corporation, which closed,
and he went to work for CEI, which is now First Energy, and
Paines Fellow in East Lake, OH, as an Operating Engineer for a
fossil fuel plant. This job requires a lot of physical labor,
as well, which he was unable to do.
Our house was fully paid, but we ended up having to take
out a home equity line on our home a few years ago to help our
children, and family members, hurt by the recession in Ohio. We
thought the hardship was--the one we were experiencing--would
be only temporary.
Early this year, we ended up defaulting on the payments for
that home equity line, and our home went into foreclosure. At
home, when I open the local newspaper, there were five pages of
foreclosures, and it's a large paper, our News Herald.
Neighbors names were in, but it was absolutely humiliating to
see my own name.
My husband and I decided that the only thing that we could
do to bring our payments current was to use his retirement fund
he received from working--we took it out as a lump sum, even
though he had to retire early, at 61, we received 5 percent
less, and we had no other avenue in which to use. We even have
to pay taxes on that money.
Our son lost his job 6 months ago, he ended up moving into
our home with us, in Ohio. Then our daughter, and 5-year-old
granddaughter needed to move in because her husband walked out
on her.
While we planned to sell our home in Ohio when we retired,
we cannot sell our home, because our children would have no
place to live.
With the current housing market, we were told that our home
was worth 30 to 40 percent less than it was a few years ago,
and this was our nest egg. Yet, we cannot sell our home,
because our children would be homeless.
We had to get away because the stress was eating me alive.
So, we moved in with my sister, Mary, and her husband. They
retired in Murrells Inlet, SC, which is just south of Myrtle
Beach.
We took about $175,000 out of the retirement lump sum to
buy a small home, because we could not live with my sister
forever. Now we have about $50,000 left in the account, until
my husband reaches 62 years of age, and that won't be until
next July, when he begins to draw Social Security out of that.
We have to keep our health insurance, which has doubled
since my husband retired. We pay about $425 a month. We both
have serious medical conditions. In addition to Rob's heart
disease and diabetes, I suffer from depression, I have a
genetic blood disorder, and I'm in Stage 3 kidney failure. I am
also a diabetic.
I have had six surgeries in the last 6 years. I filed for
Social Security Disability, and was denied, and I plan to
appeal that decision.
My problem is, once the $50,000 is gone, we have nothing
else to live on but the Social Security income, and I still
have four years to go before I retire.
This is not how I thought we would live during our golden
years. We thought our retirement was secure. We played by the
rules, we both worked very hard, we paid our taxes, we did
everything right. But there's too many Americans in our
position. You save for a rainy day, and it's pouring. It's
pouring out there, and it isn't getting better.
We need some relief. We are all--all we do is worry. What
will our children look forward to? What will their future, and
our grandchildren's future be like? Is this what they have to
look forward to?
In closing, I would like to thank you for the opportunity
you gave me today to testify and I would be pleased to answer
any questions you may have.
[The prepared statement of Ms. Cook follows:]
[GRAPHIC] [TIFF OMITTED] 50872.001
[GRAPHIC] [TIFF OMITTED] 50872.002
The Chairman. Thank you, Ms. Cook.
Mr. Salisbury.
STATEMENT OF DALLAS SALISBURY, PRESIDENT & CEO, EMPLOYEE
BENEFITS RESEARCH INSTITUTE, WASHINGTON, DC
Mr. Salisbury. Chairman Kohl, Senator Martinez, member of
the Committee, it's a pleasure to be here. I will focus my
comments on some new research that we have put out on the total
system.
Supplementation of Social Security has been--it has been
stressed--left a voluntary effort. Just released survey data
from the Federal Reserve show dramatic increases in family
asset levels since 1989, as a result of participation in
voluntary programs.
The most recent data suggest today that from this voluntary
system about 17 percent of all private workers, or about 20
million, are active participants in defined benefit plans, and
56 percent--or about 66 million workers--are active
participants in a defined contribution plan.
About 36 million individuals are also separated
participants or retirees who are receiving income from these
programs.
In addition, in the voluntary system, small employers can
sponsor plans such as Individual Retirement Accounts, and an
estimated 50 million individuals are now in such programs at
some level.
The Pension Protection Act which the Congress enacted in
August 2006, sought to increase the use of these voluntary
programs through auto-enrollment and default investment in
order to increase diversification. Record-keeping data suggest
that auto-enrollment since the passage of PPA has increased
dramatically, and in some programs participation has gone from
50 percent to in excess of 80 percent as a result of those
provisions.
Related to portfolios, EBRI data showed that at year-end
2007, 13 percent of participants had no money in equities,
while 43.4 percent had 80 percent or more in equities, in other
words, another objective change from PPA. Data show widespread
adoption of defaults in the life cycle and target date funds
that provide for automatic diversification, and ongoing
rebalancing.
Of those offered target date funds in the most recent year,
36.9 percent had at least some portion of their accounts in
those funds at the end of 2007.
Among those identified as auto-enrollees, approximately 80
percent of those investing in target date funds had all of
their assets in those funds, which is the intent of the way
that they are designed.
Among participants between the ages of 56 and 65 who had
been in the average target date fund at the end of 2007,
approximately 40 percent would have had at least 20 percent
decrease in their equity concentrations, again, leading to the
greater diversification, was an objective of PPA.
Based on simulations we've looked at with a survey
population for 2000 to 2006, if all participants in 401K plans
had invested in target date funds, at the median, balances
would have been larger than they were, in fact, based on
individually selected allocations--again, meeting the objective
of PPA.
Compared to actual participation in 401K plans, we found
that with the use of target date funds, all four age cohorts
that we analyzed would have had larger balances had they been
in target date funds. When the most conservative target date
funds were compared to actual participation, 3 of 4 of the
cohorts would have had better returns; only those over the age
of 45 would have seen relative losses.
Our February Issue Brief just released, presents
calculations on how long it might take for individual
participants to make up for the significant equity market
losses that have taken place since the market high in the fall
of 2007. Looking at a 5 percent equity rate of return
assumption, those with the longest tenure would need about 2 to
5 years in order to recover.
If equity rate of return, instead, ends up being a zero
rate of return for the next 5 years, on average, the recovery
would take 2.5 years, at the median, and for those at the
extreme, 9 to 10 years. This is both from investment returns
and new contributions going into the fund.
To conclude, voluntary defined benefit and defined
contribution plans in the private sector provide current
retirement income to millions of retirees, and hold assets for
million of workers and retirees. Recent public policy changes
are increasing the number of participants, and the
diversification of those accounts.
Mr. Chairman, member of the Committee, I commend you for
exploring thee topics, offer our help in the future, and thank
you for the opportunity to appear today.
[The prepared statement of Mr. Salisbury follows:]
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The Chairman. Thank you very much, Mr. Salisbury.
Mr. Baker.
STATEMENT OF DEAN BAKER, CO-DIRECTOR, CENTER FOR ECONOMIC AND
POLICY RESEARCH, WASHINGTON, DC
Mr. Baker. I want to thank you, Chairman Kohl and Ranking
Member Martinez for inviting me to testify.
I want to take my time to talk primarily about this
financial situation of the baby boom cohorts in the wake of the
collapse of the housing bubble and the recent decline in the
stock market.
Then I also would like to take at least a couple of moments
to talk about what I see as some of the main policy
implications of this collapse which I think have not been fully
appreciated.
My analysis--we released a paper today, based on analysis
of the survey, Federal Reserve Board's Survey of Consumer
Finance from 2004. I should say they just released the data
from 2007, we haven't fully analyzed it, yet, but I can tell
you that basically, we got the same results. Although this is
somewhat dated, nothing substantive, I don't think, would
change.
Our analysis shows that there's a huge decline in the
wealth of the baby boom cohorts, primarily because of a
decline, first and foremost, in their home. I think it--we
often fail to appreciate the extent to which housing equity is,
in fact, the primary form of wealth for most middle income
people. Even if middle income people may not perceive housing
wealth as being a source of retirement income it, in fact, is
in very fundamental ways, first and foremost because people
anticipate not having a mortgage to pay off through their
retirement years, so that's based on the fact of accumulated
equity.
Second, people often anticipate moving during their
retirement years to a home that may be more suited for their
retirement, as opposed to the home that they raised their
children in, and third, because of emergency situations,
healthcare or other unfortunate situations as Ms. Cook had just
described to us.
So, the equity in people's homes, for middle income people,
that is their major source of wealth in retirement. The sharp
drop in housing prices over the last two--two and a half--
years, has in effect, decimated the wealth that baby boomers
have managed to accumulate in their working years.
So, just to give some quick numbers to sort of summarize
the circumstance, if we look at the median wealth for younger
baby boomers--those aged between 45 and 54--that fell by 45
percent from what it was in 2004 to what we project for 2009.
So that the median household would have just over $82,000 in
wealth. This, again, is the median--$82,000 in wealth would
translate to less than half of the purchase price of the median
home. In other words, if they took all of their wealth, all of
their assets, everything they had accumulated, they would be
able to pay for less than half the price of a typical home.
Alternatively, if we think of it the other way, they took
all of the equity out of their home, and they were looked by
annuity at age 65, that would get you an annuity of about
$7,000 a year, less than $600 a month in income. Again, this is
the median. If we got to the second quintile, people between
the 20th percentile and 40th percentile, the wealth for that
group--the average wealth for that group--is $23,200.
Even the fourth quintile--relatively well-off, elderly,
people between 60th and 80th percentile--their wealth would
simply be $215,000--enough for an annuity of $17,000. Again,
not a very good income; not a very good supplement to Social
Security, for people who were relatively affluent in the scheme
of things.
For older baby boomers who had a comparable situation, the
decline of wealth for this group--age 55 to 64--was 38 percent
that gave them a median wealth of $142,000. Enough, if they
took their whole accumulation to purchase 80 percent of the
median house price, or alternatively, to get an annuity of
about $11,000 a year.
What this means is that most baby boomers--the vast
majority of baby boomers--would be almost entirely dependent on
Social Security and Medicare. I should also point out, another
number we looked at, we said, ``How many people--what percent
of the people in these age groups would actually need to bring
money to a closing?'' They wouldn't have enough to pay off
their mortgage, pay the closing costs--it was 30 percent of the
younger-aged cohort, 15 percent of the older-aged cohorts. In
other words, these people would have literally nothing to put
down as a down payment for a home in retirement.
Now, just very quickly, a point on new generational equity
that, for whatever reason, I don't think has been fully
appreciated. The loss in wealth that we've seen, due to the
collapse of the housing bubble, and the stock market collapse,
is an intergenerational transfer.
What we've seen was a loss in the order of $15 trillion of
wealth, which was overwhelmingly held by older people--young
people don't have wealth. This is, in effect, a huge loss to
the older generations, it's in effect a gain to the younger
generations, they will be able to buy homes at 30 to 40 percent
below the prices they anticipated just 2 years ago, and they'll
be able to buy our nation's capital stock on the stock market
for half the price you would have paid just one and a half
years ago.
When we have discussions of intergenerational equity, and
we've just had a transfer of wealth on the order of $15
trillion, from those who are older to those who are younger,
it's a little hard for me to see that we're doing some
injustice to those who are younger. I hope that Congress will
take that into consideration when it thinks about policy for
Social Security and Medicare in the future.
Thank you.
[The prepared statement of Mr. Baker follows:]
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The Chairman. Thank you very much, Mr. Baker.
Mr. Salazar.
STATEMENT OF IGNACIO SALAZAR, PRESIDENT & CEO, SER-JOBS FOR
PROGRESS, WASHINGTON, DC
Mr. Salazar. Mr. Chairman, and members of the Senate
Special Committee on Aging, I am pleased to have the
opportunity to testify before you today. The training, and
retraining, of the elder worker is not a political issue, but a
people issue, and the employment and training needs of the
older workforce must remain a priority for this Congress and
this new Administration.
For over 44 years, SER-Jobs for Progress, National, and its
network of partners, have worked to ensure that workforce
development needs throughout our communities are met. Currently
SER National, its affiliate network, provides services in the
areas of education, employment and training, as well as
services focused on economic development, business growth, and
job creation.
The SER Network remains steadfast in our continued efforts
to cultivate America's greatest resource--its people. The SER
Network consists of 35 affiliates operating more than 200
offices in 19 States, Puerto Rico, and the District of
Columbia, serving over 100 million people annually.
Additionally, SER National manages the training and
employment needs of over 3,500 mature workers, 55 or older, in
the Senior Community Service Employment Program, SCSEP, funded
by the United States Department of Labor. In its 5th year of
operation, SCSEP is administered by SER sub-grantees in
Wisconsin, Florida, California, Colorado, Illinois, Kansas,
Rhode Island, and Texas.
Today there is a new crisis in the American workforce. This
conflict unfolding before us in the 21st workplace is being
defined by a series of increasing generational collisions that
are affecting American productivity. In similar fashion,
whether diversity movements have partially paralyzed the labor
force--whether racial, religious, or gender related--
generational conflicts at work are causing dysfunctional
results, like reduced profitability, loss of valuable
employees, poor customer service, and wasted human potential.
The former flow of power, authority and responsibility from
older to younger employees has been disrupted because of
significant economic downturn, changes in life expectancy,
increases in the average individual period of productivity, and
demographic trends of the American workforce.
In addition, changes in lifestyles, the distribution of
highly desirable technological skills, and the possession of a
knowledge base necessary for global competitiveness have
creating a jarring upheaval to the natural flow of career
progression. The pecking order is eroding, and so is the social
and physical separation of generations in the workplace. Upward
mobility in the job setting is now facilitated by rapid access
to information, and the ability to disseminate such information
in efficient fashion. The gold standard of a senior,
experienced applicant is no longer as valuable as in the past.
Experience alone is no longer an indicator or predictor of
success. The above factors are leading to an increase in the
number of older workers being forced out of careers with no
viable retraining mechanism currently in place. The economic
downturn has created an overwhelming demand for Federal and
State employment and training programs within the one-stop
system.
Programs offered through the Workforce Investment Act, in
partnership with Wagner Peyser Services were never designed to
serve the older worker demographic. Traditional WIA services
tend to focus on services such as youth programs, young adult
training, and dislocated worker training, leaving little or no
resources available for the harder-to-serve older worker.
In reality, the increasing number of one-stop customers,
coupled with the specialized training needs of the older
workers, make it apparent that the one-stop system is ill-
equipped to meet the employment and training needs of the elder
worker.
In 2006, the Older Americans Act, Title V Program, or
SCSEP, was amended to allow for workforce skills training. This
minor change in this legislation has made a world of change in
our SCSEP participants.
With renewed hope and an enhanced skill set, our older
worker participants are finding better employment
opportunities, and are returning to the workforce with
increasing success. We would suggest that funding be
appropriated to providing workforce skills training to the
older worker population who are currently ineligible, or just
outside the SCSEP program.
We feel strongly that short-term training focused on core
skill areas of language acquisition, with a limited English
speaker, financial literacy, critical 21st Century technology
skills, and mature worker career readiness training, can create
the pillars for success for the retraining of the elder worker.
On behalf of SER-Job for Progress, and the participants we
serve, I would like to thank the Committee, and the Chairman
for the opportunity to present these recommendations as we move
forward in our joint mission of preparing America's workforce
for the future.
Thank you.
[The prepared statement of Mr. Salazar follows:]
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The Chairman. Thank you, Mr. Salazar.
Ms. Kennelly.
STATEMENT OF BARBARA B. KENNELLY, PRESIDENT AND CEO, NATIONAL
COMMITTEE TO PRESERVE SOCIAL SECURITY AND MEDICARE, WASHINGTON,
DC
Ms. Kennelly. I greatly appreciate the opportunity to come
before you today and testify, regarding the current economic
crisis, and its impact on retirement security, and I thank
Senator Martinez for taking this additional duty on.
As President of the National Committee to Preserve Social
Security and Medicare, I represent over 3 million seniors who
understand the importance of Social Security and Medicare, and
share a passion to see these critical programs preserved and
strengthened.
Mr. Chairman, it's particularly appropriate to include
Social Security in your hearing on the economic crisis today
because the program was borne out of economic circumstances
somewhat like we're living in today.
Today, Social Security provides modest benefits--the
average benefit is only $13,800. But these benefits are
crucial. A full two-thirds of the elderly receive more than
one-half of their income from Social Security and one in five
have no other income but Social Security.
If you don't count Social Security today, almost one-half
of those over age 65 would have incomes below the poverty line,
just about the same poverty rate as before the enactment of
Social Security.
Many people don't realize that Social Security is also our
nation's largest disability program, and our largest children's
program. Social Security is a rock in the chaotic financial
world we live in today. Unlike what you've just heard about the
condition of private retirement savings, Social Security checks
keep coming, every month, like clockwork.
The Social Security Administration did not miss a step
after Hurricane Katrina and Rita, and the first benefit checks
went out to the families of those who perished in 9/11 within 2
weeks of that catastrophic situation. Through wars, national
disasters, or financial calamity, Social Security checks
provide stability and cash to those who have lost everything
else.
Some economists have been pushing for cuts in Social
Security benefits as a way of addressing a long-term budget
deficit. I'm here to tell you, this would be an extraordinarily
bad idea. Benefits are modest to begin with, and benefits for
future retirees are already being reduced as a result of a
phase-in of an increase in retirement age.
Seniors spend significant portions of their income on
healthcare. Even with Medicare, and if current projections hold
true, future retirees could see one-half of their Social
Security check absorbed by healthcare out-of-pocket cost by
2025. Skyrocketing healthcare costs are the true economic
crisis. Future retirees also face a traditional pension system
that is significantly eroded, plummeting housing values and
individual savings that have evaporated. They will also need to
stretch their retirement savings over a longer period of time
as they will live longer than the generations before them. Our
children will clearly need a dependable, solid Social Security
benefit just as much as today's retirees.
Mr. Chairman, I would like to conclude by thanking this
Committee for its support of including seniors in the American
Recovery and Reinvestment Act. The $250 check that was included
in the legislation will be much appreciated, and should provide
a stimulative effect, as seniors historically spend over 90
percent of their income.
The funds included for the Social Security Administration
are desperately needed to address the additional disability
claims that always accompany bad economic times, especially at
a time when the agency is already straining to clear our
extensive disability backlog. Funds for programs funded through
the Older Americans Act will help meet an ever-increasing need.
I thank you very much for looking at Social Security as a
basic need; something that people can rely on. For the first
time, seniors seem to be in better position than some others,
and I thank you, Mr. Chairman, for appreciating that.
[The prepared statement of Ms. Kennelly follows:]
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The Chairman. Thank you very much, Ms. Kennelly.
Ms. Katz.
STATEMENT OF DEENA KATZ, CFP, ASSOCIATE PROFESSOR, TEXAS TECH
UNIVERSITY, AND CHAIRMAN, EVENSKY & KATZ, CORAL GABLES, FL
Ms. Katz. Thank you, Mr. Chairman.
Thank you, Ranking Member Martinez and other distinguished
member of this Committee for providing me the opportunity to
address the critical issue from the perspective of the
financial planning professional.
I'm a certified financial planner, and a Professor of
Personal Financial Planning at Texas Tech University, as well
as Chairman of Evensky & Katz, a fee-only firm in Florida, and
a member of the Board of Directors of Financial Planning
Association. But I am attending this hearing on my own cost as
a concerned professional.
You've heard many statistics here today, the following are
the only ones I will use. There are 77 million baby boomers.
According to research, one boomer will turn 59.5 every 7
seconds between now and 2025. We need to put all of these
statistics into context, and that's what I'm going to do.
Boomers have been big consumers, known for wearing and
driving all of our assets, rather than saving or investing
them. We've made a massive use of credit, and its over-reliance
on credit has threatened our future security. We haven't done a
very good job of teaching our children to be fiscally
responsible, otherwise why would they wind up back in our spare
bedroom, between jobs, with three kids and a dog?
Many of us are caring for our aging parents, either
physically, financially, or both. This drains our already
limited retirement resources. As we've heard, the housing
crisis resulted in a serious drop in boomer home values.
Additionally, the economic typhoon of the last year has
seriously damaged boomer portfolios. Boomers are now moving
into their financial de-cumulation phase, which is not just
about withdrawing money, it's about timing and strategies, and
frankly about how best you can make the peanut butter and the
jelly last until the end of the sandwich.
But it's also about making lifestyle changes that come with
the next phase choices. Boomers have an unrealistic view of
their own mortality; many say they don't intend to live to
their nineties, but mortality tables suggest otherwise.
The good news is that we're living longer, the bad news is
we're living longer, and we need to figure out how to pay for
it. To address their investment issues, many retirees search
for a safe retirement portfolio, 100 percent bonds to generate
income or replicate paychecks. This confuses certainty and
safety. Payment of bonds is certain, but it' certainly not
safe, especially in terms of purchasing power. The fact is,
boomers don't need income at retirement, we need an income
stream that grows regularly with the inflation rate.
The use of target date funds to solve this has an inherent
problem, I believe. Target date funds should not be age-
specific, but risk specific.
Boomers want to stay vital and active. We will work. But it
will be a positive action, not a forced reaction to lack of
resources, even if that's true.
Truthfully, I'm not comfortable with the word retirement--
few boomers are. As a country, we need to keep a positive spin,
encourage our boomers to plan for their next phase with the
independent advice of a financial planner who will holistically
examine their lives, not just their investment issues.
As professional advisors, we tell our boomer clients,
``Don't focus on how much you were worth yesterday, begin your
planning with a realistic appraisal of your financial position
today. Plan your future without simple solutions, and don't
adopt rules of thumb. Continue to invest in your 401K, even if
your employer is no longer making matching contributions.
Utilize any available catch-up provisions that may allow you
more money to put away for the future.
``You have no control over investment markets, but you do
have a significant control over expenses and taxes. All you can
really count on is what you've earned after expenses, after
taxes, and net of inflation. Seek competent financial planning
assistance. Insist that your advisor acknowledge, in writing,
his fiduciary responsibility to you.'' My suggestions for this
legislative body include, use the prestige and visibility of
the Federal Government to remind the financial services
industry of its responsibilities to its clients. Ensure all
financial advice offered to investors be based on fiduciary
principles, and hold all professionals who provide advice to
retirees to that fiduciary standard.
When developing plans and solutions for us, remember, we
are boomers, and not senior citizens. Encourage the offering of
financial education for retirees, but focus on financial
planning as a process, and not one that promotes product-
centric solutions.
Do not restrict our ability to continue to participate in
an active way in our economy. Revisit legislation that makes it
difficult or impossible for us to continue working into our
seventies and eighties.
Mr. Chairman, Ranking Member Martinez, I thank you for
addressing this topic. As you well know, the financial services
industry represents billion of dollars of economic clout. Wall
Street can well afford to provide professional, sophisticated
representation for its interests before Congress.
My professional affiliations are with organizations that
identify more closely with the public's interests, and not
those of Wall Street. That's why--along with my academic and
professional colleagues and the investing public--are pleased
that you, the true representatives of public interest, are
taking the time to consider these issues related to securing
our good retirement in the volatile economic times. I'm
confident that your collective wisdom will result in actions
that will benefit us all.
Once again, I thank you, I will respond to any questions
you have.
[The prepared statement of Ms. Katz follows:]
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The Chairman. Thank you very much, Mrs. Katz.
We turn now to Senator Martinez for questions.
Senator Martinez. Mr. Chairman, thank you very, very much.
I want to thank you for convening this hearing, and I'm pleased
that I had a part in it as well, because I think this is a very
timely and important topic, and one that I think cuts across
Republican, Democrat, Floridian, or Ohioan--this is really an
American issue that has hit at the real core, and at the heart
of what is happening to our country today.
Ms. Cook, I'd just like to begin with you, and first of all
to--my heart goes out to you for all of the concerns and
problems that you and your family have had. I am most intrigued
as to whether or not you have pursued your Social Security
Disability appeal, because there's a timeframe for that, and I
do think that you may have a very valid case, there, so I want
to make sure you don't lose your--I used to be a lawyer, you
know? I can't help myself but want to be lawyering here for
you.
Ms. Cook. Thank you, I appreciate that.
Yes, in fact, I am appealing the decision. But I was told
that this is rule of thumb, everybody's denied.
Senator Martinez. Right. Are you having--do you have some
help in doing this? I mean, are you--
Ms. Cook. Yes, I have a--I have a counsel, yes sir. Thank
you.
Senator Martinez. OK, very good.
Beyond that, I hope that all of your different issues sort
themselves out, but I think your problems are emblematic of
what our generation is going through. So, I think it's very,
very opportune that you would be here with us today, and thank
you for sharing your personal problems with us, and with the
nation. I think it's important that we hear stories like yours,
so that we might better deal with the problems of so many
others who are here, not speaking directly, but speaking
through you. So, thank you.
Ms. Cook. Thank you. I really think that I'm here speaking
for a lot of the seniors that are out there. Thank you.
Senator Martinez. You know, I'm not accustomed to thinking
of myself as a senior, I think of myself as a boomer, but
anyway, I think that the two may be about to--
Ms. Cook. I think so.
Senator Martinez [continuing]. Coincide here, pretty good.
Mr. Baker, I want to talk to you about housing, and your
thoughts on the housing situation. I thought--I was very
intrigued by your analysis that there is a wealth transfer
taking place, here, I really hadn't thought of it in those
terms, and I'm not sure I fully agree with you, but I think
it's an interesting thought that perhaps there is a wealth
transfer taking place.
What I wanted to ask is, since you were one of those who
were forecasting a bubble while many of us were being convinced
by so many others that that wouldn't happen, what is your
forecast now as to how we might evolve out of the current
depression in housing prices, into a more normal market?
Mr. Baker. Well, Senator, first let me just say that if I
got you to re-think your view of housing, my trip here was very
much worthwhile. But, in terms of where we're going, I'm very
concerned that, basically was, looking at--with the housing
bubble and how I recognized it--was that we'd had a long
pattern where house prices had just more or less kept even with
the rate of inflation. We had a sharp divergence from that,
beginning in the mid-nineties, and it peaked in 2006 with house
prices more than 70 percent above the overall trend level.
Now, we're about to fall back at the current rate of house
price decline, we'll be back at the trend level, probably at
about the middle of this year. House prices are now falling
extremely rapidly--more than 20 percent at an annual rate, in
most recent data.
My concern is that we'll overshoot. So, instead of just
getting back to where we might think house prices should be--
and not that we know exactly where that is, but roughly where
they should be--house prices will continue to fall, which is
going to dampen the economy, and further drag on the economy,
certainly further drag on the situation of baby boomers as they
prepare for retirement, and could cause the downtrend to last
much, much longer than would otherwise be the case.
My concern--I don't think you want to get extensively in
housing policy--my concern is that there's been a failure to
focus on trying to shore up prices where you can do it, where
the bubble has already deflated, as opposed to, in effect,
throwing good money after bad, trying to shore up prices
everywhere, including markets where the bubble has not yet
fully deflated.
Senator Martinez. So, your view is that it should be more
targeted assistance?
Mr. Baker. Exactly. So, you have many markets where you
could say that there either was not a bubble, or whatever was
there has since deflated. There, I think, it makes sense to try
to do what we can to shore up prices. Other markets where you
still have a long way to go, you're just throwing your money
away.
Senator Martinez. So, a targeted approach?
Mr. Baker. Exactly.
Senator Martinez. To where to help, as opposed to helping
everywhere in the country?
Mr. Baker. Exactly.
Senator Martinez. That's politically difficult to do.
Mr. Baker. I understand.
Senator Martinez. Yeah.
Mr. Baker. I'm just an economist.
Senator Martinez. I understand. [Laughter.]
Mr. Salazar, I'm so pleased to see you again, and I'm again
very proud of the work that you're doing. I just wanted to ask
whether you could share with us, beyond what you told us during
your testimony, any strategies that you think could be
employed.
As we look at what Mr. Baker said, and that wealth transfer
taking place, the obvious need, as others have testified, for
folks to be dependent, really almost solely on their Social
Security, extending the work life may become a total necessity.
Have you confronted issues that we, perhaps, ought to be
addressing from a legislative standpoint, while allowing folks
to continue to work longer, without receiving penalties until
their Social Security entitlement, benefits, and things of that
nature?
Mr. Salazar. That would be an obvious benefit, of course,
Senator.
The areas that we focused on, in trying to promote changes,
have centered around the area of retraining individuals. We
have the opportunity to work with individuals who fall at 125
percent of the poverty level. So, for example, the poverty
level for an individual--a single individual--is $10,000.
Anyone making less than $12,500 is eligible for our program.
They come to us with many barriers. Obviously, with age we
have some challenges ahead of us, and some of those are lack of
finances, obviously, but lack of training, and retraining, to
go into an adequate job. Transportation is an issue, supportive
services is an issue. We're working with individuals who were
trained in a different economy, and this is a different kind of
world that we live in today that we need to prepare them for.
So those are the kind of things that we're centered around, is
providing those kinds of supports, so they can be self-
sufficient.
I was looking last night at some of the kinds of things
that we do with individuals who, in our program, working
probably up to 20 hours per week at minimum wage, making the
transition, and I was looking at Milwaukee as an example.
There, individuals going through our program, where they were
provided the opportunity to have supports, to have retraining,
to prepare them to do something differently, were drivers.
There was an individual, George Taylor, who was with J.C.
Triplett Moving, he's a driver today, making $11 an hour. James
Jones at Arbor Gardens, in Milwaukee, making $11 an hour. We
have Jane Jankowki, Milwaukee Security Detention Facility, who
is a Program Assistant there, making $13 an hour, and Adolfo
Villaral, who's with Raul's Construction, who is making $12 per
hour. These are individuals who were making the minimum wage,
before, of $6.55, who have been given the opportunity to go out
and get full-time employment so they have additional income.
What we provide is up to, usually, between 15 to 20 hours
per week, and it's a short-term program. It used to be long-
term for individuals, and that was changed. If that's changed,
we need to prepare them to be successful, once they're exited
the program because of a term limitation, in terms of how long
they can be in the program. But, to provide support for
individuals to continue their life in a productive way is what
we're attempting to do with those kinds of supports.
Senator Martinez. Mr. Chairman, my time is up.
Thank you.
The Chairman. Thank you, Senator Martinez.
Senator Gillibrand.
Senator Gillibrand. Thank you, Mr. Chairman, for holding
this hearing. This could not be more timely.
Thank you, all of you, for coming to testify before our
Committee.
I've spent the last few weeks traveling around New York
State. When I've met with my seniors, their concerns are
overwhelming. They're very worried about being able to afford
their retirement. They are very worried about their savings--
should they have any--that they've declined so rapidly, that
they feel enormous economic insecurity, and financial
insecurity.
I want to talk a little bit about some of the issues that
you've brought up on the 401Ks. I understand the issues that
you've raised about the target date and the need for
regulation. So, I'd like to hear what kind of regulation you
think would be most effective.
Second, some of the seniors I've spoken to have said that
their 401Ks have required draw-downs. I know that's something
that we were looking at through the Fed, to adjust that, that
they don't have to draw down. Because if their portfolio has
been declined by over 30 percent, now is not the time,
necessarily, to draw down, when those stock prices are so
reduced.
Third, I wanted to talk a little bit about commercials that
you see on television where you have these organizations that
are offering services that say, ``If you have a paid settlement
or an annuity, it's your money, get your cash now.'' Those are
very appealing ads to many members of my community, because
they have such a financial need, currently, and they're willing
to cash in those annuities or those paid settlements, but those
companies are taking an enormous cut into the value of those
annuities. In some respects, they may well be inappropriate, or
really taking advantage of our seniors. So I want your thoughts
on that.
Then the last issue on the financial issues is, we had a
hearing in my former district in upstate New York that
Congresswoman Carolyn Maloney, who's the subcommittee
chairwoman on the Financial Services Committee on the House
side, about seniors being taken advantage of through credit
card advertisements.
I heard the worst stories of seniors who were, you know,
encouraged to take out a credit card, and they would buy, you
know, a television for maybe $300. Then because they couldn't
make the payments regularly enough, or fell behind, those
payments, and the requirements--because of the fees--they would
be paying over $1,000 in fees, for one $300 purchase.
So, I have very grave concerns about that, and we did pass
some legislation to begin to address it, but I'd like your
thoughts on whether that legislation has taken care of that
problem, or if that problem still exists. To whomever wants to
take those questions.
Mr. Salisbury. I'd start, Senator, on a couple of your
points, not all of them.
On the issue of commercials and settlement agencies, that
is something that has been out there, and to your point, has
proven attractive to individuals. I just use an example from
the retirement income system more broadly, defined benefit
pension plans, those like Federal employees receive that only
pay life income annuities', they do not offer single-sum
distributions.
Over half of private defined benefit plans now offer
single-sum distributions as an alternative to annuity income,
and when that offer is given, on average, 95 percent choose the
single sum distribution, only 5 percent choose the life income
annuity.
If one looks at the most recent trend in defined benefit
plans, it was announced last week that Coca-Cola had followed
this, shifting from a so-called ``traditional'' defined benefit
plan to a hybrid cash balance plan, that now accounts for about
30 percent of the private defined benefit plans that are
covered by the Pension Benefit Guaranty Corporation. Almost all
of those plans offer single-sum distributions, and out of those
plans, again, more than 95 percent of participants take the
single sum; only less than 5 percent take a life-income
annuity.
Finally, if you look at it vis-a-vis 401K plans, only about
20 percent of defined contribution plans even offer an annuity
option, but like the Federal Thrift Plan, where they do have
extensive numbers, less than 1 percent of those given the
choice of a life-income annuity or a single-sum distribution
take the life-income annuity.
So, the settlement issue, and why people are driven there,
is very symptomatic of designs and behavior in most of the
population, regardless of age. So, I think your regulatory
issue on that is the need to make sure there is not fraud, and
there's proper pricing.
But as long as that market is there, what we know from
retiree behavior, coming out of the retirement system, if you
give people a way to take all of the money right now, as
opposed to spreading it over a lifetime, what we know from the
hard research, is that will most always do that.
It goes back to Social Security, why it is an annuity-only,
COLA annuity. During the debates of the past, if individuals
out of Social Security were given the ability, the choice, the
data says they would take the single sum.
Senator Gillibrand. Mr. Chairman, may I just ask one
follow-up on that line?
If you were going to propose regulation, what would it be,
and would you ever recommend there be an alternative--some kind
of not-for-profit organization, or some kind of government-led
organization, that is in the seniors' interest, and can offer
very little overhead fee for that payout? Some competition, as
it were, in the market of being able to give those funds in a
lump sum? Would you recommend that? I'd like your thoughts.
Mr. Salisbury. Well, there is regulation in that area,
there is competition in that area. The regulation tends to be
somewhat limited. I think that, again, it may need to be
increased vis-a-vis fraud in advertising.
On the retirement side, I think this is an issue--I first
testified before this Committee and the late Senator John Heinz
on this topic in 1981, of annuities versus single-sum
distributions. That becomes, frankly, you either mandate
annuitization if you want people to have life income security
or they will not make that choice.
Senator Gillibrand. I guess I want you to address the
current practice. If these companies are taking 20 percent or
30 percent of the value of that annuity in exchange for the
lump-sum cash payment, do you think there should be competition
in the system that might only take 2 percent or 3 percent as a
fair overhead of the transaction cost?
Mr. Salisbury. Ideally, absolutely, yes.
Ms. Kennelly. Senator? Senator?
The Chairman. Ms. Kennelly.
Ms. Kennelly. I can remember when I first went to Congress,
employees had defined benefit pension plans. Then came the 401K
plans, and I remember being on Ways and Means, and addressing
the issues raised by those changes. When you talk about
annuities, they're not necessarily wise choices for everyone.
The reason I'm sitting here today is we have one solid
rock, and that's Social Security. The beauty of Social Security
is you can't out-live it, and it's adjusted for inflation. So,
we should have all of these private products, no doubt about
it, if you want as a supplement. But the main thing is to keep
the rock, Social Security.
The Chairman. Ms. Katz.
Ms. Katz. All of the things that you've asked about have
really one common thread, and that is that our seniors at--
frankly, the American public--are not really well-educated
about their financial lives. So when they get desperate, they
make the wrong choices. Leaving an annuity or an income stream
for a lump sum is appealing because they have some control over
it, but they don't know what to do with it.
So, when we talk about legislation, I think we need to talk
about the inherent issue, is most people are not educated to
their own financial life. They do not know how to handle a lump
sum. We've made proposals to even make changes to Social
Security, which is a serious issue, of letting people handle
their own situation. So, we're just creating more and more
opportunity for them to make bigger mistakes.
We need to tighten up all of those things with legislation,
so that they cannot make these mistakes, and we need to educate
them, starting at a much earlier age then when they start
retirement years.
Senator Gillibrand. Many folks believe you should start
educating children in the earliest years, so that they
understand what financial health is, at a very young age.
Ms. Katz. Absolutely.
Mr. Baker. Just very quickly, I think the situation you're
describing--because there's both the issue about people
getting--replacing annuity with a lump sum, but also, I think
the question you specifically asked about the fees involved. I
think there of a situation that's very analogous to what we
just saw with the mortgage chaos the last few years, is that
it's very easy for a sophisticated person to come in there, and
take advantage of someone who's not engaged in these
transactions on a daily basis, and I think there, there really
is a role for the government to regulate this, to make it very
difficult--we're not going to make it illegal for someone to
take their annuity and take a lump sum, but I think it's
important to say that we have standardized contracts, and make
it very difficult for someone to go outside that, so it's an
unfriendly legal environment for those who might try and take
advantage of people that way.
One other point, just very quickly, the issue of draw-downs
from retirement funds I think has been misrepresented. I was
testifying yesterday and the gentleman from the Investment
Institute agreed with me on this, that there are very few
people who reach age 70 and have their whole fund invested in
equities.
So, the idea that someone's going to have to sell their
stock and lock in a really big loss, that's almost
inconceivable. I mean, there may be a few people in that
situation, but almost everyone's going to have enough money in
their account at that age, in a money fund or a bond fund that
they could make their withdrawal from that.
Now there's a separate issue, do you want to force
withdrawals? That's a separate issue that Congress should
reasonably consider. But the idea that you're forcing someone
to lock in a loss, that really isn't a plausible scenario.
Senator Gillibrand. What's your opinion with regard to the
last point you just made? About forcing people to draw down or
not?
Mr. Baker. Well, there is an issue, you may change the
timing on that, given increased life expectancies. I mean, I
wouldn't consider that a top priority, but obviously as we go
through the years, and we project, and certainly, hopefully
will see increasing life expectancy, we may want to change the
timing on that, that' a reasonable thing, certainly, for
Congress to consider.
The Chairman. Thank you very much.
Ms. Kennelly, listening to you talk about Social Security
this morning, I am led to wonder whether or not you were a
strong supporter of President Bush's thoughts about privatizing
Social Security?
No?
Ms. Kennelly. Senator, you know I wasn't. [Laughter.]
The Chairman. But, you talk about it, in terms of how
important it is, and maybe all of you, how important Social
Security and Medicare is.
You know, President Obama is talking about the need to
reform the entitlements, and I--while he hasn't been specific,
he hasn't talked about expanding the benefit, he's talking
about the hard choices that we have to look forward to. What
are some of your thoughts on that?
Ms. Kennelly. Well, Senator, I--look, I've been around a
long time, and I know that we have a long-term problem with
Social Security. I was on the Ways and Means Committee in 1983
when we reformed it the last time. We took some very hard
votes. You know, I voted to increase the payroll tax, increase
the retirement age. I wonder how I got reelected. But the fact
of the matter is Social Security still is the basic retirement
system for the United States of America.
What I really have great worries about, is this idea of a
fast-track Commission to look at entitlements.
Now, last night the President made it very clear that the
real crisis we have in this country is healthcare. But is there
a long-term gap in Social Security? Yes. We have a shortfall.
But I would hate to see a Commission produce legislation that
is on fast track with no amendments, permitted. I think the
Committees--Ways and Means, Finance--they've got the expertise
to do a reform bill through regular order. You could have the
debates, and the public could understand what we have to do.
Do we have to make sacrifices? Of course we do. But, there
isn't a lot of room to cut Social Security. When you think
about it, Senator, two-thirds of those people who collect
Social Security--that's half their income, half their income.
For twenty percent--20 percent--Social Security is all they've
got. I saw a statistic recently, African-Americans--40 percent
of those collecting Social Security--that's all they've got.
But I think we have to understand, the very reasons that
Franklin Deleanor Roosevelt created Social Security are still
there. When you get old, the paycheck stops. That's it. Jeanine
was talking about helping her children--life can get tough. But
if you have Social Security, at least you have something. Any
nation worth its salt has a Social Security program that's much
more robust than the one we have.
So I would urge the President to be very careful. He's got
to do healthcare reform, it's going to be the toughest thing
elected officials are going to have to deal with. But, you
know, be careful with Social Security, because it's the basis
of our retirement system.
The Chairman. How so is the Medicare benefit any less
important to seniors than a Social Security benefit? Aren't
they on a par, almost?
Ms. Kennelly. Well, of course they are. But the point is
that--
The Chairman. No, I'm bringing this up by way of asking
your opinion on that entitlement program, in terms of its cost,
and the President's discussion about having to reform that
program, as well as Social Security.
Ms. Kennelly. No, you've heard how passionate I am about
Social Security, because I feel it's a necessity. Medicare is
in crisis, there's no doubt about it, just like the whole
healthcare system is in crisis.
What I'm scared to death, about Senator, is that we're
going to try to look just at Medicare, not at the whole
healthcare system. Right now, the only ones that have a
universal healthcare system are those 65 and older. We've got
to keep that in place.
I came from Hartford, CT. I can remember when those
insurance companies didn't want to touch people over 65. But
once you put them in a pool, and spread the risk, it was OK.
So, I'm delighted to hear the President and his people want
to look at healthcare, because they've got to look at it
together--Medicare, and the whole healthcare system. Because I
will tell you something, Senator--if they can fix healthcare,
then half the cost of Medicare will disappear. We'll be OK
because what's left of the long-term funding problems will be
easier to fix.
The Chairman. Any comments from the rest of the panel on
Medicare and Social Security?
Mr. Baker.
Mr. Baker. Yeah, just very quickly--I would say in the case
of Medicare--and I was very happy to see that President Obama,
I think, has said exactly this, that the problem with Medicare
is the problem with healthcare. That our healthcare costs on a
per-person basis are about twice those for other nations--
Canada, Germany, whoever you throw in there--and they're
projected to keep growing, relative to the rest of the world.
This is a problem for the economy as a whole.
One of the reasons General Motors is coming to us--coming
to the government for help is its healthcare costs. They did a
back of the envelope calculation, if we had the same per-person
healthcare costs as Canada--everything else exactly the same,
but just paid the same per-person healthcare costs--General
Motors, over the last 10 years, would have $22 billion more
than it does today.
Healthcare is going to devastate our economy, even if we
got rid of Medicare and Social Security. So, the priority has
to be to fix healthcare. If we fix healthcare--not to say
Medicare won't be an issue--but it will be a much more minor
issue, it will be a workable issue. If we don't fix healthcare,
there's nothing we can do to fix Medicare.
The Chairman. Mr. Salisbury.
Mr. Salisbury. Senator, I'd add a point on that, which is
that with the dramatic decline in what private employers have
provided as supplemental medical coverage for individual
populations, Medicare becomes even more important with the
accounting standards that have just gone into place for State
and local governments for retiree medical benefits. For the
very first time they're having to deal with the long-term costs
of the commitments that they have made. We expect that you will
begin to see State and local governments back away from the
retiree medical promises that they've made in the past, for at
least new hires and those not yet retired, even if they honor
those promises for current public sector retirees.
As you know, in the last budget that President Bush
submitted to this Congress he had proposed for even Federal
workers that the eligibility for retiree medical upon Federal
retirement be based on tenures of work immediately before
retiring, as opposed to the current provision of 5 years. Were
that to be done in the context of this, that would affect the
Federal workforce.
So, essentially what we're seeing through the voluntary
system is a cutting back in a way that essentially, with each
and every year, is making Medicare even more important to a
larger proportion of the seniors in our population.
If you then take a point that the Congresswoman made, which
is so compelling to me, that the Part B and Part D expenses of
Medicare, which currently absorb about 19 percent of the
average Social Security beneficiary's Social Security income,
one currently projected to go to 50 percent of the average
Social Security income by 2025. That frankly is using a health
inflation assumption that is about 40 percent less than what is
actually occurring in the economy.
So, our estimate is that if health costs are not somehow
brought under control by 2025, the proportion is likely to be
closer to 70 percent, as opposed to 20 percent.
As someone whose mother at 93 is now dependent for all of
her income on Social Security and the size of the payment she
is making for health insurance. The concept of the Medicare
payment proportion of her Social Security income continuing to
climb is concerning.
There will be inter-family transfers to make sure Mom's
fine, but for the overall population, to reemphasize Deena's
point, figuring out a way to bend the cost curve on future
medical expense is absolutely essential to the long-term
security of Social Security, and for Social Security income to
be enough for anyone--even at the very high replacement
levels--meaning lower income individuals. If you don't solve
the health cost problem, then Social Security will have more
and more retirees facing poverty-level income in retirement.
The Chairman. How important is it to do everything we can,
legislatively, and offering inducements to employers, as well
as individual retirees to continue in the workforce after age
65?
Mr. Salisbury. I personally think that it is essential--one
of the points that was made by Deena is that in our surveys,
individuals--she hadn't mentioned our surveys, but I will--what
we know is that individuals dramatically underestimate how long
they will live today.
My mom and dad were born in the teens, meaning 1913, and
1916. My father lived to one month short of age 94, and my
mother is 93 and doing quite well from a health perspective.
That means I should expect to live to 105 to 108. Most
individuals today believe that even if they retire in their
early sixties, they will only be alive for 20 years. Which
means everybody assumes they won't make it to average life
expectancy.
Why don't they take a life income annuity? Because they
think a cash sum distribution is a better deal, because I'm
going to die young. You then add all of this together, working
an extra 2 or 3 or 4 years, and with the current economy, my
wife has told me to plan on at least 5 to 6. I'm turning 60, so
I've said, ``OK, I'll go to 66, and that's full Social Security
eligibility.''
But, I think for everybody, if one has the ability to keep
working, physically, the easiest way to deal with what would
otherwise be an adequate retirement income is to work an extra
few years, either full-time or part-time, and the easiest way
to make sure one can deal with health insurance provision and
avoid catastrophic health problems is to keep working until at
least age 65, when Medicare becomes available.
Mr. Baker. If I can just very quickly throw in a point on
that, that again, this points out the urgency of healthcare,
that obviously if employers are providing healthcare insurance,
it makes them very reluctant to take on an older employee,
because they know that's a very large bill.
So, again, if Congress could pass legislation that will
bring healthcare costs more down to reasonable levels, then the
prospect of hiring an older employee will be less burdensome to
employers.
The Chairman. Ms. Katz.
Ms. Kennelly. Mr. Chairman, as you know, you and I--we are
the models of working longer, and older. But, you have to
remember something. I said in my testimony that the average
payment for Social Security is $13,800--it's very moderate.
What we always have to remember, and you have to remember as
you address this question, is that if, in fact, you raise the
retirement age for Social Security, you are effectively cutting
benefits--especially in an economy where jobs are scarce.
The Chairman. Ms. Katz.
Ms. Katz. I think we need to explore, also, partial
retirement benefits, so that people can work on a part-time
basis, or even full-time, and still have access to some of
their benefits.
Boomers, as I pointed out before, want to stay vital and
active in the workforce. The fact is, if we all quit, we
wouldn't have enough people to replace us, anyway. So, we need
to take a very positive view on working, we need to take a look
at those arbitrary restrictions on mandatory retirement. I
mean, 65 was an arbitrary number to begin with. So, we need to
take a good long look at this.
Coupled with giving employers some benefits for supporting
that healthcare, will also help prop up a lot of the problems
that we're having.
The Chairman. You want to say something, Mel?
Senator Martinez. I was going to ask--yes, thank you.
Ms. Katz, I was going to ask whether--in your financial
planning--you take a different approach with, you know, the
baby boom generation, I guess, spans from those of us at the
beginning of it, at 46 to mid-sixties, I guess, right? Are
there different challenges in trying to prepare for retirement,
obviously, depending on the age of the people within that
timeframe?
Ms. Katz. Well, there are, simply because their resources
are being strained from so many different levels. So, one of
the things we do is to encourage people to work longer. But,
there are not--there's not a lot of flexibility in making those
plans, and I think that's where legislation can help.
Most boomers that I see are making a life transition. They
are willing to accept working in a less lucrative business, to
be able to have more personal satisfaction, that's the nature
of boomers moving into the next phase of their life, that's why
we don't relate to the word retirement.
So, as a result, we're going to see people working in a lot
of other areas that they haven't been working in before, for
less money, changing their lifestyle, downsizing, which is why
we call it ``decumulation,'' it's not distribution, it's
``decumulating'' in a whole lifestyle.
So, we're talking more about lifestyle choices, and fitting
those into needs and circumstances with boomers than we ever
did with the past generation.
Senator Martinez. Thank you.
The Chairman. Go ahead, Mr. Salazar.
Mr. Salazar. In our experience in providing financial
education to the SCSEP population that we work with, we found
that it makes a huge difference in their lives. I mean, we
encounter so many individuals that are un-banked--that don't
have any kind of a relationship with a financial institution,
and then become very vulnerable to predators out there. There's
just a huge market that we encounter that have never opened up
an account, anywhere.
The kinds of things that they learned and the situations
that they relate to you, is shocking at times. But it makes a
huge difference in preparing them, to once they're making an
income, to be able to keep that income and pay for the--for the
things that they have that are necessities in their life, as
opposed to giving it away to somebody who's just trying to take
advantage of them.
The Chairman. Yes.
As you point out, Ms. Katz, there is a real need for older
people to stay in the workforce. It's not that we have to find
a way to keep them there even though we don't need them there--
the opposite is true. That employers need their experience, and
their wisdom, and their willingness to work in a more flexible,
part-time arrangement to run their business. All of the
predictions about the future indicate that this is going to be
true, isn't it?
Ms. Katz. Absolutely. I mean, we don't have enough people
in the workforce under retirement age to replace us. So, I
think that's going to be a very big issue.
Having legislation dealing with older workers' rights, and
opportunities will be very vital in the future. We can't go
away, and second, we don't want to go away. We want to stay
active.
The Chairman. Yes.
Ms. Katz. That's part of why we need to encourage a whole
shift in what we have been looking for in the past.
The Chairman. There's a big mental satisfaction in keeping
people in the workforce beyond 65, to them, isn't there?
Ms. Katz. Well, you know what? As planners, we had started
out saying, ``You can't retire. You're going to have to work
longer.'' Boomers would say back to us, ``We don't want to
retire. We want to stay in this. We want to contribute, we have
a knowledge base that can't be replaced.'' So you is us. But
give us that opportunity to be used.
So, what they're doing is putting a positive spin on
something they have to do anyway, and that's work longer
because we need the resources. But now, we're working longer
because we really want to stay in the economic community. We
want to participate.
The Chairman. Very good.
Mr. Salisbury. Senator, and even for those that may not be
so thoroughly motivated, this is America Saves Week, and we
released yesterday a survey that we had done with the Consumer
Federation of America, tied to America Saves Week.
One of the things that that new survey data showed, which
was just collected 2 weeks ago, is that the proportion of
individuals who--as a result of the current economic
situation--say that they now intend to work significantly
longer, has gone up significantly.
If one's looking for some potential silver linings out of
the current situation that we're facing, is it does appear to
be serving as somewhat of a sledgehammer against many people's
realities as to really thinking through what their savings
levels are, how much they need in the future, and whether they
can actually afford to retire. I think that the good news of
that is that as our data has always suggested, a large
proportion of those that retire have done it, literally,
without having made any calculation of what their income or
expenses would be.
They hit eligibility, somebody said, ``Oh, you're eligible
to retire. Oh, that means I must be able to do it.'' They have
done it. The current situation is causing people, from the
survey data and behavioral data, to at least stop, think, plan,
far more thoroughly. So, I think that is in and of itself going
to lead to later retirement ages, and to far more thorough
planning by individuals, relative to their exit from the
workforce.
Since Mr. Bernanke said yesterday that we're likely to be
in a recession through the balance of 2009, the data suggest
that that extended period is going to cause tens of millions of
older Americans to very thoroughly reevaluate what their plans
were, and boomers--if you will, Senator--and that that is
likely to change patterns dramatically from what some might
have thought as recently as a year or two ago.
The Chairman. Ms. Katz.
Ms. Katz. The big problem is, we give people the
opportunity to retire, but we don't give them the tools to make
the decision intelligently. I'm surprised that, in the Stimulus
Package, we didn't include some kind of financial planning
support for people, because it's really what we're talking
about here, at every age. They do not have the tools to make
good decisions about their retirement, so the forced working is
a result of not planning very well earlier, as well as a lot of
economic downturn that we've suffered in the last couple of
years.
So, legislatively, I would like to see us provide more
financial literacy programs, more education, more tools to
retirees, more encouragement to seek intelligent, non-biased,
fee advice to be able to make those decisions. More people
make--spend more time on what kind of refrigerator to buy--then
what they're going to do with their retirement.
The Chairman. Well, that's great. This has been a wonderful
panel, I guess I'm moved to say that hearings like this where
the Senators learn an awful lot by listening to the panelists
don't occur every day, but it's occurred today. You brought a
lot of information and wisdom to the table, and I think a lot
of it's going to be translated in action in the months to come.
So, I thank you so much for being here and we thank you all
for being here.
We are adjourned.
[Whereupon, at 12 p.m., the hearing was adjourned.]
A P P E N D I X
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