People still aren’t saving enough for retirement. Congress can help

It’s good to encourage everyone to save more for their own secure retirement. More private retirement savings is good for the economy, and it is key to people’s standard of living in their later years, particularly as people are living longer. Right now, Congress has the opportunity to provide everyone more peace of mind in retirement through similar bipartisan legislation in the House and the Senate.

During my time in Congress, I have worked with members of both parties to expand access to private savings accounts for millions of Americans and help more hardworking families build a nest egg. Although we have made real progress, there are still too many families who aren’t saving enough or have no savings at all.

Adding to the challenge is that during the COVID-19 pandemic, the initial slowdown helped to widen the gap between those who have retirement savings, and those who do not. According to a recent study, a higher percent of U.S. Households risk losing their standard of living in retirement now than before COVID. With the uptick in the stock market, those who had healthy retirement plans did well, but those who did not are on average worse off.

The good news is that Congress is in a position to help. Last December, I chaired a bipartisan Senate finance subcommittee hearing focused on this opportunity. The consensus in our hearing was that we have the common ground needed between the Senate and the House to pass bipartisan retirement reform that will make a real difference. Recently, I reintroduced the Retirement Security and Savings Act (Cardin-Portman) alongside my colleague Sen. Ben Cardin, Democrat from Maryland, to do just that.

Cardin-Portman contains dozens of provisions designed to help more Americans achieve a safe and secure retirement by addressing four major challenges in our retirement system. First, it will help low-income and part-time workers save more for retirement. Before the pandemic, only one in four American workers in the lowest income bracket participated in a workplace retirement plan, and among part-time workers in the private sector, only 22% had access to a savings plan. Experts believe that these low levels of retirement savings for these groups were even further eroded during the COVID-19 pandemic.

Our bill expands the Saver’s Credit tax credit to help more low-income Americans increase their retirement savings and makes the credit directly refundable into a retirement account. It also increases the credit amount available for many low-income savers, and requires employers to allow part-time workers who have completed two years of service to participate in 401(k) plans. This means that the single mother working part-time to support herself and her children will have a chance to sock away some retirement savings.

Second, we have a baby-boomer problem: America faces a looming wave of retirees who do not have private retirement accounts. Among households over the age of 55, nearly three in 10 have no retirement savings or pension plan whatsoever.

Cardin-Portman will help these near-retirees to more quickly build up their nest eggs by increasing the catch-up retirement plan contribution limits after age 60, letting workers save more money in less time. The law will also encourage employers to make larger contributions to their employees’ retirement funds through both tax credits and regulatory improvements. More baby boomers will be able to have the kind of financially secure retirement their parents enjoyed.

Third, less than half of small-business workers have access to a workplace plan, compared with 88% of employees at large businesses. Small-business workers at family-owned companies help drive our economy, and we need to ensure they have the opportunity to save.

Our bill will help small businesses offer plans by strengthening the tax credit they receive for starting a new retirement plan and creating a tax credit and legal relief for small-business plans that do things to get more workers covered, like automatic enrollment features and a minimum 3% employer match. It also includes another credit for small-business plans with automatic reenrollment every three years.

Finally, in an age where more individuals are living longer and healthier lives, there is an increasing risk that people will outlive their retirement savings. And more people who enjoy the work they do are choosing to hold off on retiring until later in life, like my dad, who worked well into his seventies.

Current rules, called the required minimum distribution, say that when you hit 72 years old, you have to start taking funds out of your retirement account and paying taxes on them. Our bill will help individuals save longer for retirement and put off those taxes by raising the required minimum distribution age from 72 to 75. For people with less than $100,000 in their retirement account, our bill removes the requirement entirely.

Cardin-Portman provides a strong base for overhauling our private retirement system to provide more savings opportunities to those who need it the most. I’m pleased to say that 25 of its provisions are included in the leading retirement bill in the House of Representatives, Neal-Brady, which has already cleared the House Ways and Means Committee with strong bipartisan support.

I look forward to working with my Senate colleagues to do the same and help more Americans have a safe and secure retirement.

Rob Portman is the junior U.S. Senator from Ohio.