I keep telling everyone who’ll listen: if you want to be heard in America, you need to do more than vote.
You need to be a joiner.
No, I’m not implying a shift in your career path toward carpentry. We Catholics celebrate St. Joseph, patron of all carpenters, iconically portrayed as ever at work with hammer and plane. Good St. Joe: a fine craftsmen, diligent and patient in taking care of his precious family. An ordinary sort of fellow, in his way – the type I work with and who we serve every day.
To be precise, if we follow the Biblical Greek – and we’d better – St. Joseph was a ‘technos’. In proper translation, that’s a house builder. I’m sure he could whip up a bench or bookshelves (hardly needed back then, but never mind) like any builder today. Skilled carpenters can frame a house, craft a fine kitchen table, or create a garden sculpture from a tree stump with a chainsaw, if you please. They’re the original human multitools.
St. Joseph built with steady efficiency. On good authority, we his work was ever founded on rock-firm foundations. Build the house right and let the hard rains fall: it will stand. Why, it’s just like retirement planning. Near miraculous, isn’t it?
That out of the way, let’s switch back to political joinsmanship. In a democratic system, a single voice gets drowned out. You need to be part of a chorus, not necessarily heavenly – that’s how it works. Every cause has its advocacy group: AARP and NRA; NOW and NAACP; NMW and NFT. If you know the acronym, I hope that means you’re a member.
There is one group likely outside your purview, but in my view, it is of vital importance to average Americans: ARA, the American Retirement Association. ARA comprises industry representatives, a notion that may raise the hackles of common citizenry, who hate political action groups, as a rule. Curious, as this corporate shill is on our side, meddling in gross politics to secure prosperous retirements for all.
Proof of concept: many provisions in SECURE Act 2.0 come directly from ARA. I have been waiting expectantly, as if for a birth, for Congress to vote on 2.0. They can do it, I just know it, despite the whirlwinds circling Capitol Hill. We have something near proof: the first SECURE Act passed easily with bipartisan support in the tempestuously divisive days of Trump. Today’s problems seem like kid stuff in comparison.
In that era of unrestrained party warfare, only one heck of a good bill would stand any chance. President T signed the Setting Every Community Up for Retirement Enhancement Act of 2019 on December 20, 2019. It amended rules governing popular saving plans, making it easier to amass funds for retirement. SECURE received a high-five from AARP and other consumer and industry advocates, despite a few controversial provisions (like killing the ‘stretch IRA’ strategy).
Congress, dizzy with its own success, I imagine, quickly launched an updated supplement, the Securing a Strong Retirement Act – colloquially, Secure 2.0. I’ve written on it a few times this year (most recently in August: Rebalancing Act – Could SECURE 2.0 Get Citizens’ Retirement Plans Back on Track?), so I’ll just summarize here.
The most important provision, in my humble view, is automatic enrollment. Today, employers simply offer new staff the option of joining the company retirement plan. The smart ones do; the rest, foolish or cash strapped, can easily, maybe unthinkingly refuse.
SECURE 2.0 would require employers to automatically enroll new employees at a 3% contribution level. The worker could amend this boilerplate plan to save a different amount or opt out altogether, at their discretion or lack.
Act 2.0 is likely to pass early next year, again in bipartisan majority. If you doubt Congress’s zeal, consider: 2.0 is the brainchild of the House Ways and Means Committee. Reflecting the Congressional principle of overlapping authority, in November, the Education and Labor Committee introduced its parallel proposal, the RISE Act.
The Retirement Improvement and Savings Enhancement Act (H.R. 5891) cribs most of its provisions from SECURE 2.0, but adds its own twists. The goal is quite plain: the draft law’s framers think a few jots and tittles were left out of 2.0, and they hope their own bright ideas will be tucked in the final, reconciled bill. It’s the way they walk down the halls of the Hill.
RISE contains some pretty good notions. Pooled employer plans would be open to more categories of workers. Right now, employers can transfer an employee’s retirement plan into an IRA if the participant’s balance is between $1k and $5k. RISE would take the upper limit to $7,000, a smart, simple amendment to keep pace with the times.
Employers would be allowed to offer small carrots to lure workers into livelier participation in retirement plans, tempting them with things like low-value gift cards. Banks used to give a free toasters to new account holders, back in the old days. The ancient is new and incentives are again commonplace in commerce. Sounds kind of hokey, but if it works, why not?
Reporting rules for employers would be rationalized and simplified under the Act, a wise move that should lighten the paperwork.
According to ARA, over seventy percent of Americans are saving for retirement – the good news, first. Worryingly, twenty percent have not saved a dime. Middle-class Americans – people earning less than $100k per year – are the main participants in company retirement plans, accounting for 80% of such savers.
For lower middle-class Americans, the availability of workplace retirement plans is the key driver for saving. ARA numbers tell us that 70% of people earning $30k-50k per year participate in company 401(k) plans, while only 5% have their own IRAs. ARA told all of this and more to Congress, which listened to them and other organized pundits.
That’s the way the pinball ricochets in DC, dear readers. The First Amendment suggests it: citizens should ever “petition the Government for a redress of grievances.” Some despair of trying, yet believe it: leaders listen, maybe fearfully, to the voice of a crowd. If you’ve been silent yourself, the New Year’s resolution is clear: join together with a band. Pete Townshend, forgive me for cribbing.