>>.

>> next to look at ways to improve retirement for americans during the hearing of the senate health education and labor and pensions committee . according to bernie sanders almost 45% of americans between the ages of 55 and 64 have no retirement savings. >> senate committee on health

education and labor will come to order. and the purpose of this hearing is that the issue we are going to be discussing has enormous consequences but unfortunately i don't think it's getting the attention it deserves and i want to thank all the witnesses were being here and i look forward to a good and serious discussion. let me start off .by saying there's a nation we have more income and wealth inequality today than we ever had in history of america. while the billionaire class has become wealthier our social safety nets for the most vulnerable in our country remains far behind other wealthy nations. it's a disaster and if we do not get our act together it's only going to get worse. we have the highest rate of

childhood poverty of almost any major nation. our child care system is now na dysfunctional, more than 600,000 fellow americans or homeless and over 85 million are uninsured or underinsured . but let's be clear, it's not just the children and the poor who in the richest country in the on earth are hurting. our nations senior citizens are struggling as well. the truth is we now have a retirement crisis that demands our immediate attention . which brings us to the subject of today's hearing. in the united states today almost 45% of older americans between the ages of 55 and 64 have no savings at all. and no idea how they will retire with any shred of dignity or respect, 45% of workers between 55 and 64,

zero retirement savings. and as frightening as retirement crisis is for older workers it is even a bigger concern for the millions of senior ng citizens who are no longer able to work, who have exhausted all their savings and who have nopension . incredibly this really is quite incredible i, one out of every four senior citizens in america are trying to live on n an income of less than $15,000 a year . think about that. while over half of our nation's seniors are trying to survive on income of less than $30,000 a year. just put yourself in the place of that person. how do you pay the rent? how do you pay for health care, prescription drugs, how do you put food on the table with 15,000 or even $30,000. the truth of the matter is that many cannot. that should not be happening in our country. according to the oecd, the

organization for economic cooperation and development we now have the dubious distinction of not only having one of the highest rates of childhood poverty in the industrialized world where our children we also have one of the highest rates of senior poverty compared to other wealthy nations as well. in denmark only 3% of seniors live in poverty, in france 4.4, united kingdom 15.5 in america over 23% of seniors are living in poverty. i would hope we would agree that is simply unacceptable in this country . 50 years ago it was not uncommon for corporations to provide workers with a defined benefit pension plan that guaranteed a monthly income in retirement . back then many corporations made a promise to their workers , if they work at the same company for a reasonable time, they would be rewarded with a monthly check that would enable them to live

comfortably in retirement area and not a radical idea, that's what it was then. the longer you work at the same company the bigger your retirement check would be and your employer was there in those days all the responsibility on the pensions of their workforce. sadly tragically those days are mostly behind us. as a result of the relentless 40 year war on the working-class wage by corporate america conditional pensions have become an endangered species on their way toextinction . and the result for workers has been tragic. 1983 31% of american workers were at risk of not being able to maintain their standard of living . in 2020 that number rose to 51%.

in other words we are moving on it in exactly the wrong direction. that's the problem, what do we do to address that crisis? first at a time when far too many seniors are living in poverty and many have nothing in the bank for retirement we must expand social security, not cut social security as many of my colleagues in congress would have us do. congress, and we must make social security solvent for the next 75 years so they can be there for our kids and our grandchildren. legislation i have introduced along with nine cosponsors accomplishes those goals. according to the social security administration the legislation i've introduced would make social security solvent for 75 years and increase benefits by $2400

per year for seniors who need them. how do you do that? my goodness, how do tyyou do that? at the time of massive income and wealth inequality we have a radical idea, maybe the people on the top could start paying their fair share. today a billionaire pays the same amount of money into social security as somebody whomakes $168,000 a year as a result of the gap on the social security paycheck , make $1 billion a year, hundred $68,000 a year you pay the same amount . anybody in america think that makes sense? i don't. regulation we proposedwould lift the cap on social security starting at $200,000 . you do that, social security itself is solvent the next 75 years, increase benefits by $2400 per person. but that's not all we have to do. in my view every corporation in america should be required to provide a retirement plan for their workforce . should a ff corporation choose not to offer retirement they must

give workers the option of contributing to a pension plan similar to what members of congress half. today federal employees and members of congress have a certain percentage of their tout salaries deducted from their paychecks and put sainto the program that provides a pension based on salary in years of service. the bottom line if it is good for members of congress it's good for the american people. so it's where we are, we have a crisis, i think we have common sense solutions and i look forward to working with members of this committee to address them. senator cassidy. >> thank you chair sanders. oc it's a little odd, the focus today seems to be promoting benefits, prescribing an agenda that is outdated and a little bit disconnected. in 1974 congress passed the income security act in

response to tens of thousands of americans losing their returns on security to give their employers defined benefits. exemplified by the collapse of the studebaker automobile company in about 1800 other pension plans terminating over a four-year period, imagine the impact on those hundreds of thousands of workers employed by them. since the rest of the prime benefit system has been largely in place by defined contributions which has flourished as of 2021 146 million americans collectively own t$9.5 trillion in return on assets . the advantage of those contributions is while many flock to it is workers own their own retirement. no matter what happens to the workers current or previous employer their retirement funds are secure. very few people now retire after 50 years with the company and get a golden watch. most will move between employers.

this allows them to do so while maintaining a retirement fund . importantly congress passed secure at 2.0 on a bipartisan basis making improvements to our nation's retirement system . we have the option to take wethe one such as the chair has advocated for on a bipartisan not to. instead based the solution on success of defined contribution system secured 2.0 was so complicated it passed out of all four committees with unanimous votes and on the house floor can you imagine this by a vote of414 to 5 . the chair speaks of needing to find a solution to a crisis but we have that solution. by the way there are still provisions of action 2.0 that have yet to be implemented including those helping low income individuals. for example the enhanced savers match a tax credit going right into low income americans retirement account which goes into

effect in 2027. the chair erreferenced statistics pointing to a retirement crisis but many of these were found in 2021 which predate the passing of secured 2.0 and mathe improvement it will make especially those targeting lower income americans. by the way there is a place for in defined benefits . with reforms it can be successful. in 2006 we passed these rough forms which resulted in some of thesefunds being overfunded, even into 2009 . however these reforms have not been implemented in the union utilized multi employer defined benefits space . many of these multi employer defined benefit plans have struggled for years when in 2021 they told congress they need to bail out . many of the plans were badly mismanaged . democrats passed a $90 million bill of the multi employer defined benefit system on a partyline

vote without strings on the tax dollars to prevent strings that would say you have to make these reforms in the event of future failures. this lack of reform system is that which some wish to expand. unfortunately the largest labor union lobby to make sure the bailout did not come from meaningful reforms protecting workers and preventing future failure. simple reforms by requiring disclosures for defined benefit plans, requiring unions provide beneficiaries with a clear report of their definedbenefit programs . now we're seeing the results of the failure to enact these provisions. the simple state pension fund received $127 million overpayment in the bailout because they include thousands in their bailout application.let me give credit where credit is due, thanks to pres. sean brian of

this committee the money should be repaid but the pension fund tells the i committee it would be impossible for them to repay the money . workers covered by thestate should be alarmed about sthe financial state of their retirement plans . their returning money they were supposed to receive would destabilize the fund now. frankly it's infuriating to hear the pension plan could be on the verge of collapse only a few years after they received $10 million to bail them out. if the chair which it wishes to expand the defined benefits plan i am so shappy to discuss reforms to alert the one that have been successful in the individual employer space and pass them to stabilize the entire defined benefit system but we will have to overcome staunch union opposition to any reform that provides greater oversight protection for their workers . to the

gathering though i think we can do it. to be clear republicans do not support putting the thumb on the scale for either defined benefits or defined contributions . we support what works. most businesses with individual employer defined benefit plans wish to expand their programs . if it's working don't fix it . we are seeing the good work that companies supporting the best of defined benefits into defined contribution including many lifetime products and lifetime income is desired by many, let's make it easier to include them. there are things we can do on a bipartisan basis which is why we are working together to hold a bipartisan hearing that the majority is here on a bipartisan basis with no input from the minority on the scope of its focus. we will need something bipartisan to pass with 60 votes . we can do it. senator kaine and i introduced to bipartisan bills to help the american act to help workers between ages of 18 and 20 and

the barrier is making it harder to join the retirement plan but are and will act assist workers who previously defined to participate or contributed rlittle to the employer's pension plan . many workers earlier make less money, they want the money in their paycheck to pay their bills as opposed to contributing to retirement but when their wages grow we find they opt back into start contributing to their r retirement . this allows a business to periodically auto enroll into the plans with the option to opt out but that way they don't accidentally miss out on crucial years preparing for retirement. i hope the chair will indulge us with the bipartisan legislation and enclosing many other members have wonderful ideas included in secured 2.0 and it would great to be great to explore the current effectiveness of

these provisions and discuss any other creative ideas in the system we have. thank you and i yield . >> we have five excellent knowledgeable witnesses . we're going to begin with sarah schambers, a third-generation autoworker that has been a member for 17 years . she spent her first takes years as a full-time temporary employee at a ford subsidiary in plymouth michigan. in 2012 to secure permanent supportive family sarah was forced to move from michigan to louisville and kentucky. to work at the slavonia transmission plant as a member of the local 182. thank you for being with us. >> thank you and good morning. my name is sarah nischambers, a proud third-generation office worker. i followed with in my

mother's footsteps and built cars for a living and i'm proud of the work i've done. the difference between my generation and past generations is they hada pension , i do not. don't have healthcare when i retire, i do not have retirement security i. i've been an autoworker for 17 years and six of those i worked as a full-time temporary employee until 2012 . that was the big moment for me . because for generations having a job at ford mint stability and security . and being able to plan for . urself and your children it meant being able to buy a house. but for those of us that hired after the financial crisis that has not been true . instead we been fighting to get back the american dream and trying to turn these jobs back into careers just like they were when my parents and grandparents who built this country and the american autoworker. two of my grandparents retired from the big three

had very different paths. my grandfather gave three decades to ford motor company and he got toretire at age 55 with a pension and healthcare . he .was supported with dignity to have a life after ford motorcompany . he was able to have a life with his kids, his hi grandchildren and his nd great-grandchildren . the part of his community and not just work until he died. my grandmother had a different path . she was hit with lou gehrig's disease and had toretire early . she didn't have to choose between doctors. she knew she had healthcare and a pension to rely as she retired and struggled through her health . for me in sickness or in health i don't know what myfuture holds . it causes fear and anxiety in the working people. i don't know how long they're going to be able to last and these

people say maybe iwill buy that house, maybe i will put down roots or maybe i will stay at this company .i didn't become a fourth-generation autoworker because i love building cars, because i love the low starting pay or the lack of retirement security that we now know. i come from a family of autoworkers because for years it was a career, one that you could work in and get something out of. and a lot of ways for generations ford was the american dream. it meant if i pitched in, if i worked hard i be able to have a life after ford motor company but without a pension and without healthcare, we have people leaving these companies after 30 years with nothing more than a have a nice day and hope the stock market doesn't crash. that is unacceptable for america. as you know the uaw one major victories in our state . i'm

proud of the accomplishments we made after 15 years following mine after the financial crisis. but we still fell short of what generations of autoworkers, still fell short of what the american dream should be.the companies were adamant they couldn't afford to add to our pension liability . they said that wall street would look down on them okand that giving back our tpensions could affect their stock prices and possibly lead todlower credit ratings . nowadays the stock price is more important than 150,000 autoworkers, that's a shame. the next big three contract expires 2028. and we are ready to fight like hell for retirement security, for pension and healthcare when i retire. there's an old saying, will strike if provoked, well i think wall street calling the shots and calling the victory

that autoworkers can have retirement security, that'sl what i call being provoked . there is another old saying, which side are you on? so i want to close by asking you you as senators who represent us which side are you on. the american workers who elect you or corporate greed in wall street who say a dignified retirement is too much for the american people to ask for . thank you for your time. >> thank you very much. our next witness will be teresa ghilarducci a economics professor at the new school in new york city who has published in economic journals and several books on how we can ensure retirement security for all americans, thank you very much.

>> because of an inadequate pension system or other poverty rates s decrease all of her peers. we are the highest at 23% and in contrast the poverty risk for elders is a very low 3% . the us retirement system gets seasoned b's on international benchmarks and that system gets an a . you might hear about the average retirement being quite high and growing but for the typical american that median retirement wealth has gone down for the bottom 90%. because averages don't tell the story, distribution does. if elon musk walks on the witness stand today we would be the richest on average of all time in the health committee. but the typical retirement wealth fraud would not go off.

for the typical american approaching retirement my study looks at the older households and their typical retirement wealth, the social security wealth is most important . the dream of social security benefits, a defined benefit system, for those at the bottom half is worth about $180,000. but they have zero alretirement wealth and zerohome equity . a typical household connects 40% of the middle class, their retirement wealth is only about 30,000 and they have, we have about $129,000 of equity . it's only the top 10% who over the past 30 years have had rapid increase in their retirement health and their health as well. >> ..

so what is to be done? well, senators here have tried to protect the defined system, senators cassidy and kane would mandate they let earlier at 18 and not 21. your autoreenrollment act would help reinvigorate provisions to help more participation. and you may hear about auto ira's. automatic individual retirement accounts at state level and federal level. they are good baby steps for moreut access but ira's permit lekages and because people access their individual retirement accounts they should be called emergency savings accounts, they're not retirement

accounts. we can extend wealth building opportunities to all americans and one bipartisan powerful proposal already exists, senator hicken blooper along with hen or the tillis, republican, lloyd schmucker would extend to those who don't have one. they do not crowd out existing accounts. it follows the successful savings plan, the savings plan for the staff members of congress, for members congress. it would offer enrollment and it's 5% match which helps mitigate the top heaviness of our current match. it's endorsed by experts all across the political spectrum, aarp, charles schaub.

why professor is retirement in america becoming a luxury? my students ask me every semiester why do so many people in america who are old, why are they poor or why do they have to work? i congratulate committee members from both parties from recognizing theco urgency, disaster and the crisis and for your caring and wisdom to solve it. i heard you said you need bold bipartisan reform, thank you. >> thank you very much, our next witness will be dan doonan with the executive director of the national institute of retirement security, more than 20 years of experience working on retirement issues. thanks a lot for being with us. >> thank you.

chairman, sanders, ranking cassidy i appreciate the opportunity to testify,m executive director of us inner and we are nonpartisan, nonprofit think tank in washington, d.c., financial service companies, plan sponsors, labor unions and nonprofits including aarp. congress has made progress to address america's retirement crisis, secure act and secure act 2.0 were steps inhe direction, however, much work remains to ensure that americans can be self-sufficient in retirement. key points i would like to make, americans do face shortfacility. 401kk plans are an important part of the retirement equation, they were just not designed to

replace pensions. and third, today's pension designs and management can be beneficial for employers, workers and the economy more broadly. pensions are the most economically efficient way to deliver retirement income and they offer workforce advantages to employers. pensions paid out more than $600 billion in 2020 supporting $1.3 trillion in economic activity. pensions, of course, are user friendly for workers and face little leakage. in the past the biggest challenge has been for employers the cost has been unstable but today there are more sophisticated tools and benefit designs that have addressed this challenge. i believe if companies give pensions a fresh look they will discover that win-win solutions are possible. diving a little deeper into the gravity of the u.s. retirement problem, the daily clearly shows

most americans will not have enough money for financially secured retirement and they are worried about it. our generation x research found that the bottom half of genex owners only had a few thousand dollars of retirement, median household 40,000 in retirement savings. also retirement savings for genexx are highly concentrated amongst the highest earners. more broadly the national retirement risk index finds that half of u.s. households will not be able to maintain their standard living when they retire. americans understand the scope of this crisis, 79% of americans agree there's a retirement crisis with 55% concerned that they cannot achieve retirement. looking ahead, burden prepared for retirement increases, live longer, without risk pooling and deal with rising costs.

research shows that the nation's individual savings base system is not well suited for workers. it's important to note 401k's were never meant to replace pensions busy complemental vehicle. conventional wisdom suggests that v 401k's cost less but i think what i hear when that is said it means we are putting less money into a less efficient system and as cost rise and hoping for the best. post retirement brings the biggest challenges and inefficiencies, news research asked how many retirement income could a hundred dollar can generate annually for someone age 65, the responses were jarring, only 8% of workers provided accurate response most wildly overestimated the level of income they could count on. third, many assume pensions have similar benefit designs and

nothing can be further from the truth. two public plans provide example in transparent in their operations, the wisconsin retirement system. my written comments provided showing remarkable costability of the systems through volatile times. the ground is shifting with respectth to the employers offering pension. we've heard about the interest that uaw to return to pensions and we all read the news about ibm moving back pensions which actually produces cash savings for ibm as well. finally, my written testimony details policy issues that could help facilitate a pension renaissance. strategies that reduce cost volatility over time without a major disincentive to air on the safe side and in conclusion, thank you for holding this important hearing and the opportunity to testify. i will be happy to respond to

questions. >> thank you very much, mr. donovan. senator cassidy, you want to introduce? >> yes, please,oo my pleasure to introduce rachel, senior research fellow at the heritage foundation who has worked focused on retirement and labor policies, promote economic growth and well-being before joining her senior economist for the united states congressional joint economic committee. she holds ba from economics from the university of mary washington and masters degree and economics from georgiatown.i welcome, we appreciate you being here and look you being here. >> thank you for the opportunity for being here this morning. in my testimony i would like to look at the current states of americans retirement security and discuss failure of certain defined pension benefits. older americans financial well-being is strong by his oic-

historic importantly the lowest earners have the highest replacement rates in retirement. households in the bottom 20% average 123% to have preretirement incomes whereas households at the top average 75%. older americans report greater financial well-being than any other age group and over the past ten years the percentage of people over 65 say that they are just getting by are having a hard time getting by fell by half. increased 330% over the last 35 years. defined benefit and defined

contribution plans can provide secure retirement, but when not managed r properly, defined benefit plans can end up like ponzi schemes.

simply maintaining current benefits would require householr pay 300,000 in taxes. my analysis shows that if a younger worker today were allowed to put their social security taxes into personal account they would have there's times as much in retirement after purchasing anewtty. policymakers must reform social security before it comes a more steal for younger workers. policymakers canan improver the program and enable greater personal savings. prime union pensionon plans are worst disaster than social security. multiemployer pension funding has $823 million and 41 cents on

the dollar of promised benefit. this underfunding is systematic, 96% of participants are in a plan less than 60% funded. this happened because unions took advantage of preferential rules thaton allowed them to increase benefits without requiring higher contributions to fund those benefits. yet instead of fixing system, congress passed worst type of bailout, picked winners and losers, does absolutely nothing to fix the root problems which encourages more recklessness. about 10 million workers are in plans that won't receive bailouts and would become insolvent. to prevent union workers and retirees from receiving half of benefits and to prevent taxpayers from having to pay another $700 billion inhe bailouts, congress must show up and apply the same funding rules

to union pensions as it does to nonunion pensions. social security and union pensions are anything but secure. the last thing that americans need is for lawmakers to try to put more of their retirement savings into accounts that they neither own nor control and which are managed by groups of people who repeatedly put their own personal incentives above workers and retirees well-being, to help improve financial security of all americans including younger workers who face the greatest financial struggles today, policymakers should enact universal savings accounts so that it's simpler and easier for americans to save for all types of expected and thank you. life events. >> thank you very much. first, you almost nailed your five minutes let me just complement you. now i have the pleasure to introduce mr. stevenson, president of retirement solution nationwide bringing more than 17

years of experience havingg joined nationwide in 2006, he holds bachelor of business administration and finance from the university of oklahoma and masters of business administration degree from northwestern university. he's responsible for overseeing nationwide retirement plan operations and we are delivering workplace solutions for plan sponsors andns participants. mr. stevenson, welcome back to the u.s. senate and thank you for being here. >> good morning and chairman sanders, ranking member cassidy, members of the committee, thank you for convening today's hearing tof discuss the nation's retirement system and how we can better meet the needs of america's workers and retirees. as mentioned my name is eric stevenson. president of nationwide retirement solutions neigh wide mutual insurance company. fortune 100 company based in columbus,n ohio. we provide a full range ofwe financial services products. nationwide 26,000 retirement plans protecting nearly $200 billion in participant assets and helping to secure financial futures for over 2 and a half million participants.

we are the top provider of 457 retirement plans, serving 1.84 million workers. we also help -- we also focus on helping small business employers, employees with the average plan size is 40 employees or less. so nearly 25,401k plans in that space. when nationwide began the retirement solutions business back in 1973 it was a very different landscape than we see today, employers offering pensions took on the risk and the burden of managing that asset on behalf of their employees. most of whom would work for that employer for their entire career before retiring with their benefits. by 1975, there were two defined contribution plans for every one defined benefit plan in the market. the burden of managing retirement assets began to shift onto the shoulders of the retirement saver and away from the plan sponsor. well, neither of the solutions, well, neither of the solutions on their own was perfect, traditional db's kept employees

tied with their employer through vesting requirements and calculations, dc plans expect average employees to have the knowledge and the confidence to manage their own investment choices with little support. traditional db's offer income stream throughout retirement often including survivor benefitsng too. dc plans are portable and can be moved with the worker from job b to job as they search for higher pay and new opportunities. now, in 2024, we have the ability to take the best of both systems and move past the less desirable features, the successful passage of secure act of 2019 and secure of 2022 created opportunities to innovate and improve the plans and offerings that didn't previously exist.io today's dc plans come with a host of education support and financial planning tools. there are tax incentives to offer plans to employees and

make employer contributions to theirr savings, student loan matching helps young savers start early, autoenrolled features get more and more worker saving for retirement. most importantly, plans can now easily integrate protected retirement income into employer sponsor plans, workers with access to these products can select knowing what their guarantied income will be upon retirement.ar nationwide is dedicated significant resources to build out a comprehensive to specifically meet the needs, encouraging plan sponsors to offer at least one protective retirement income solution in their plans will go a long way in making sure that people have guarantied income when they retire. with 2024 represents 4.4 million americans that are going to turn 65, largest number in our history, 12,000 people are turning 6500 a day, with that kd of trend i'm especially energized to be here today with all of you seeking the same goat

of a security retirement for america's workers and i look forward to your questions as we look for ways to solve this crisis. >> thank you very much. we can begin with the questioning. you know, hearings like this experts throw out numbers, i look at the world little differently than conservative economists in terms of what is happening to working families but at the end of the day, you have millions and millions of people who have worked their whole lives are entering retirement and they're scared to death and i think your testimony was extremely moving because i think you're not speaking about your own life, not even uaw members, millions and millions of people. talk a little bit not only from your own experience from friends and family what it's like to have worked in your case 17 years for one to have major corporations in america and as i

unction it right now you have no retirement program, no pension program on an emotional basis, on a personal basis what is that like? >> so, yeah, we have a 401k and we got a raise 401k. great foot forward but when i retire my 401k is based off and the rest of america now that's in my generation is based off of what the stock market is doing. i've seen several times in my lifetime where the stock market went down and we've lost a lot of money in our 401k. i'm not at retirement age but when i look at my 401k and the amount of money that was bleeding out of it with the covid it makes me very uneasy. it kind of feels like especially working at ford, i had a goal post when i first hired in and

then you're a temporary employee full-time until further notice so now. n >> explain to members you were temporary for six years, long temp, what does that mean? >> yeah, i was considered full-time, so i worked 40, 50, 60 hours a week but i was locked in at $14 an hour until 2013 and i was expect today do everything a full-time employee did but i didn't get any of the benefits and actually when i hired in i questioned what parts of the contract i fell under and they said, it depends on what we are talking about. so there was never any full, like, here is their book, this is your rules andnd regulations. no, we are not going to cover you under that. >> okay. >> thankoi you. thank you very much. we are in one sense the

wealthiest country in the history of the world. a lot of billionaires out there doing very, very well. how does in your judgment the american retirement plan, the status of older americans compare to people around other wealthy nations? >> yeah. >> microphone. >> my dada really looks at that question, so i compare what people were like when they were approaching retirement 30 years ago and then take the same snapshot of the generation that looks like them right now and as i said in written testimony today, 50%0% will not be able to meet the retirement standardsil and most of them won't be able to meet poverty standards. compare that to other countries with all different kinds of systems, germans, the french, even the italians, just look at

our pairs and we fall way behind. i was looking in elderly poverty rates kazakhstan does better than us. >> i heard that things are getting better. >> yeah, that was lessons on averages versus medians. because the rich have done so well, they have brought up averages that people who talk about average retirement wealth can point to, it's gone up but that's because the top 10% got the benefit of retirement tax cuts, they got the benefit to have run-up in the market, they at no time take money out, you know, to buy their houses. >> oh okay, last question, thank you very much. right now, billionaire pays social security taxes on $168,000, that's about it. massive amounts of untaxed money there despite massive income and

wealth inequality, that makes sense to you. microphone. >> thank you for the question. i would note that one of the reasons social security financing fell off track is we used to capture 90% of total income and that was expected to continue but with rising inequality 81. i feel like they did a pretty nice job with 40 years of level cost, but there are some areas where the projections didn't come true. >> senator cassidy. >> i will differ to senator. >> thank you, mr. chairman. thanks for having this. this is interesting. and we all know that as mr. stevenson said a lot of us weremr retiring. i retired a few years ago and my wife told me to get a damn job.

here i am today. i for 40 years paid max for social security and probably paid close to a million dollars in social security and i think i get about 3,000, maybe, by the way social security for those if you don't know this group up here in 1983 voted to tax social security and then a few years later tax it again. it's all a sam. this is all a scam. i mean, we got people that are getting ready to retire that are going to live 2 to $3,000, impossible. it's impossible because what happens it comes up here, we spend it with 35 trillion-dollar in debt, we don't have any money, we are debt broke and then taxpayers have $2 trillion in credit card debt. we are in huge trouble and this body we better start figuring that out because we are going to have a run on this city here soon and there's going to be

about 150 million people coming up saying where is our damn money that we paid in. i could have put my social security money 40 years in the market and probably worth 8 to 10 million today but the federal government wasted it, so i will get off my horse there. it's good that we have thisoo because we've got, i get a pension check from education. i was part of a union, it's not going to help people. people are going to have to work, continue to work longer and longer. am i right, can you say something about social security and it y being taxed for some reason, we are taxing people for the second time on social security that they put into -- into an account? >> yeah, i like to point out when social security was first founded, this will never take more than 60% of the income. today it takes 12.4.

so we are talking about thousands of dollars more per year. it's actually more recommended that the tax be up to $66,000 equivalent no n today's dollars of earnings but overtime has expanded massively and the money has been spent and where everybody thinks money has been set aside, no, for the past 13 years, every dollar that has gone out of workers' paychecks it has gone to pay promise benefits and that's what happens when you have a system that enables those in charge of it to spend the money in the immediate term and leave the buck to the next generation that's coming along and because social security has grown so much it's actually to the detriment of lower income workers in particular who have to pay such a large share of they payroll tax to social security they have little to save for retirement and lower income and african-american workers have the lowest life expectancies so they are the most likely to get nothing but from return. 1 out of 4 aftermen men will die

between the ages of 45 and 64 after having paid into the system for decades tens if not hundreds of thousands of dollars and they get nothing back. >> what's the solution? >> i think we ultimately have to shift towards the universal benefit system. that's what true social, so gradually over time, i think we need to bend down the benefits from the middle and upper income earners, actually increase them lower and income earners, look at things like indexing, retirement age to life expectancy, more accurate reflex index and workers need an option to have money and earns positive rate of earn. >> i havee a 28 and 29-year-old, two boys, paying social security, they ask me all of the time, dad, will i ever see any of that money? will they see it? >> i think they will see some of it. none of them raises their hand. i think that there will be w something there but it's not

going to be what has been promised. >> mr. steven, you have anything to add to that? >> thank you, senator, whatever that is, when we talk about social security, we talk about pensions, the two things that they both have in common is that guarantied income, you know what you're going to get generally speaking at the end of it. what i referenced in terms of protecting retirement we have developed solutions to get both of those in very efficient way and address the issue around market volatility because we have step-ups and very efficient way to deliver that millions of americans that we above -- and that's all because of what you all did and they have put us in a position to do that and that's why i'm encouragingtous have every 401k, 403b plan add to one of those solutions so american workers can choose so that they know what they will get in retirement. >> why can't we put our money in our own 401k instead of putting in social security, is there an answer to that?

>> i think -- what i love is that they're asking the right question. savings is a good thing and i think there's a place for social security, there's a place for pensions and certainly a place for what we are doing in 401k plans. >> senator, thank you very much, thanks to you and the ranking member for having this hearing and thanks to all of our witnesses for being here today. mr. stevenson, i want to start with a question for you, we can increasens savings by supporting small businesses that offer retirement plans to their employees. that's why my colleague on this committee t senator budd and i e working to develop bipartisan bill to t improve existing retirement plan start-up tax credit.ti this bill would ensure that the smallest businesses receive tax cuts that fully cover the cost of starting a retirement plan, mr. stevenson, how can expanding retirement related tax incentives for small businesses help increase access to retirement security for their workers and how can congress

continue to support small businesses in their efforts to provide retirement plans? >> yeah, the credits for small businesses are really important. everything that we can do to encourage to start up 401k plan is hugely successful whatever that is as former small business owner myself, one of the things when you start a small businessn that you're struggling with is so many things that you're wrestling with and get to go that part you want to make sure you are getting through payroll. >> thank you.an another question for you, mr. stevenson. since 2019, congress has twice pass into law bipartisan legislation to increase access to retirement savings options particularly military spouses part-time workers and student loan borrowers.

>> again, secureact 1.0 and 2.0 huge in terms of momentum in what they have done to create more access. we are on the right track. what we need to do now, we have to make sure that people are taking advantage of thosese benefits that you've already provided, that they're utilizing those, there's a lot out there and we are working on that but that's -- i think you just -- you're on the right track. we have to keep pushing down that path. >> it would be helpful for us to understand 2.0 is getting implemented, what -- what challenges we are seeing and what other changes we can make to just make it easier and easier for americans to save earlier, earlier in their careers. i want to turn to you and i want to thank you very much for your testimony, it's really meaningful, it's really important. i also wanted to talk specifically about the impact

that working, that motherhood las on working women and under capacity to save for retirement. according to recent department of labor report, mothers lose average $240,000 in income over their lifetime as a result of the time that they spend caring for their kids. the lost income in turn reduces mother's retirement savings by nearly $60,000. we obviously have to do more to help moms and caregivers so they can retire with dignity. as i understand it, you have two children, is that right, how has your experience been trying to both care for your kids and save for retirement? >> so thank you for the question, it's really important when having children to be able to say i know when i can leave my career and i know that i can still provide. when the cost of living goes up,

so does baby sitting, so does day care and until this recent strike our wages were way behind. and on top of that when school is out or day care is out, you to take time off work in order to stay home with your children, so any of the 401k that i'm putting into, whether i'm off for a day or six weeks with my children, i'm not putting in to my 401k daily. on top of that is maxed 40 hours. if i work 60 hours, i'm only allowed to, the company only matches up to 40 hours of what i work. >> got it. >> if i don't work the 40 hours i'm already behind. >> yeah. thank you very much. thank you very much for where you are testimony, thanks mr. chair you. hey, thank you all for being here. i think we share a concern. how do we improve retirement for elon musk for the kind of folks

who are at the low end? and so, ms. ghilarducci, you and, sir, and asked her indulgence? you to shoot it. can we restart of me defer to him? okay, nevermind. so, , really the two of you, ms. ghilarducci and, ms. ghilarducci, saying ever thinks so you said is almost portions having parts of it you mentioned, ms. greszler, that your statistic come of our deck and 50% of those just getting pie by has decreased by one half percent of that income is 120% of pre-retirement income. so can you respond going to ask you to respond? spread love to because we've heard some widely different statistics here. the difference is looking at survey-based data which just asks individuals what your income is versus administrative data such as irs tax records,

what people have actually reported on their taxes. .. >> so you'll see in page three of my testimony here, there's a study that's using the irs panel data and 123% replacement at the median, 93% replacement. so most people on their tax records appear to have significant income in retirement. >> can you >> can you respond to that? >> that study is old. the cps has been corrected for that. i use a much more expensive

study from the university of michigan that looks at what happens when people live their lives after they filed other taxes, went through life course and on the verge of retirement how much they have, that's been double-checked with irs data administrative records and i standby my written testimony the bottom half has barely anything. the top has almost a million. >> last word quickly? >> the data is available on the internet. you can look them up. >> thank you for hospitality. you mentioned the department of benefit, now some employees are going back to it. you mentioned ibm bm having relatively stable employment. and says the average number of jobs someone holds in a six-year period from 18 toe to 24 is 5.7. an average from 25 to 34 and 2.9 from 35 to 44.

it does seem like our current job market, people move a lot and the defined contribution allows-- (inaudible) as opposed to five years before i qualify. which we dothere are changes

and there's always been turnover, you know, the incentives have changed dramatically. >> if you added defined benefit, people are more likely to stay with their job. >> we to that. >> i'll say whenever i read a large number, meta is laying off a lot of people, it's often not the workers choice it's the employer's choose to point that out. mr. stevens, the anxiety of an investor dependent upon her retirement about the kind of stock market moving up and down. it's one thing if you have a cushion and in your experience, another, oh, my gosh, i'm 10 years away. you mentioned the term, step up and lock in. now, i'm guessing that from what i'm hearing from you, that would be a way to deal with the anxiety of that small investor, can you elaborate?

>> yeah, absolutely. you've got it exactly right. and again, it's really taking the best of what the pension world had to offer and bring that into the defined contribution plan and we've developed and a number of my peers, addressed that issue 100%. and what i love about this, we know that 60% of americans don't have an advisor and probably goes without saying and making these available inside 457 plans or 401(k) plans, you get the meta institutional level or the corporation, small corporation. >> got to wrap up, because he's tapping the thing. and mr. chairman, the statements from the american benefits council, the a arissa, retirement ira-- >> without objection. >> and i thank you for the

hearing and i want to thank the witnesses for the expertise you bring to the hearing. i don't think there's anyone in the room that doesn't understand the scope of the problem especially after the testimony how important it is to have savings for all of life's needs no matter where a person lives, no matter their circumstances, that, of course, includes retirement. we know that secure, reliable pensions have been phased out by major corporations over time that in my judgment are increasingly cutting costs on the backs of workers and this has contributed to some devastating data with regard to retirement savings and the gaps therein. professor ghilarducci, i want to start with the findings in your gunman, i want to make sure you have this right. half of americans near retirement 51 to 64 have no wealth in retirement accounts,

is that true? and also, that that same meaning ages 51 to 64 have no home equity, half don't. >> that's true, too. and that's because our debt creating institutions have overwhelmed our wealth creating institutions for most american workers. student loans, helocs, no down payments for your house, credit card debt, baby-sitting money. the ability to take money out of your retirement account. that's the account of first resort. that should be the account of no resort until you retire. so our wealth institutions have not worked for most americans. >> i want to talk to you about a bill that i've introduced to confront part of the problem, it's called the 401 kids savings account act to help at least begin to reverse these trends. this bill automatically creates

savings accounts at birth for all children, all children in the country with federal support for low and moderate income families and then starting when that child reaches the age of 18, funds can be used for higher education, a small business or first home or retirement. starting to save at birth means families can put the market to work for them leading to compound savings and greater assets later in life. to illustrate this in one particular example, the aspen institute found that starting savings at birth rather than at age 32 when the typical family starts saving for retirement, results in an additional $473,000 for retirement. so that's what our 401 kids plan can achieve. i wanted to ask you about that and also, ask mr. stevenson for others about the importance of

building savings starting at birth. >> yeah, i can quote einstein who said the power of compound interest was one of the most powerful forces on earth and it works the other way, debt, if you compound debt and you have debt when you start off, it can compound the other way. so, it's a really good plan. we should start with wealth and accumulate it. >> mr. stevenson? >> senator, what i would add, you know, we encourage savings at any rate at any level. what i would add is if we auto enrolled everyone at age 21 when they graduated from college, we wouldn't have a crisis either. we would make huge progress, just getting people started 21 versus 31 captures a vast majority of the number that you quoted. >> i know i'm close to running out of time. what's your sense of this in terms of the importance of starting savings at birth? >> i think when we look at--

i think when you look at a retirement system, it's too common to start at age 40. you have a short time frame. you don't have the opportunity for investment returns to support the cause for retirement. so starting earlier, obviously, makes the math work much better and i think it could help with equity issues and possibly help relieve some financial pressure, you know, stress, that sort of i think this, too. thank you. >> thanks very much. thanks, mr. chairman. >> thank you, senator. >> i want to ask miss ghilarducci and crestler this question, does it ever make sense to borrow money to consume, to spend. start over-- ments yeah, sure, there's good debt, good debt. >> know the to-- i'm saying to spend it, to consume it as opposed to investing it. you knows there's a big difference there. does it ever makes sense to

borrow money to spend it in the present for something that's other than an investment. >> rarely. >> rarely. >> what about you? >> only if it's going to produce a positive return over time like a-- >> you flipped it to an investment. >> so, i'd like to propose this piece of information. when we came out of world war ii we had the highest debt in the history of our country, but that was the greatest generation. they grew up in the depression. they fought world war ii, we somehow ended up paying off all that debt building the interstate highway system, begs the question, how much of what ails us today when we even display it through our own federal government that we're a society that wants to live in the present to where you're not investing for the future?

and here i'll point out in the institution that wants to be backstop for some of this stuff we're talking about, it would be wonderful if we could do it. five years ago when i got here we were borrowing a trillion a year and now it's a trillion dollars every six months. not to mention somebody, i think you did earlier, social security goes broke in nine years, medicare in about four or five. and we don't fix even that. so, aren't we kind of missing the main issue that maybe as a country, as a society, we've lost sight of actually what builds for a good future and my point would be, that you need to become savers and investors inherently, rather than consumers and spenders which we've become through society and as a government. and comment on that. >> no, i think you've got it right. i mean, the government and

businesses are really good investors. you can-- the government-- >> the government is a good investor. >> absolutely you told me the highway bill. >> that's a tangible project, yes, so you've got an asset. i'd agree there infrastructure. >> human capital, big investor in education. that has a rate of return. so i'm with you. household-- >> have we gone too far on a variety of subjects to be credible as a place that could come in and try to fix the same thing we're talking about that we're abusing here? >> i don't buy in on the abuse, but if that were together on the borrowing you do as a government should be an investment, absolutely. >> okay. >> i would disagree that the government is a good investor, i don't think it is and it would be wonderful to talk about having children to be able to start retiring day one, but we have the exact opposite. as you pointed out. debt is the reverse of compound interest so we have children

being born in already they're immediately burdened with 100,000 or more in debt they're going to have to pay off in the future. so the best thing the policy makers can do to create a brighter future for every generation is to not burden them with that debt. >> i agree 100% and i think it's kind of sanctimonious to be talking about it from here when we would be the greatest example that has kind of abused the whole equation of not trying to borrow money to live in the present. it's always a bad business plan. we've got a situation back in indiana, the act called the suzanne muffly act was an example where government stepped in and picked winners and losers, and had to do with an automotive industry to where certain folks got bailed out, some didn't. it begs the question, too, and when we do step in can we be in

the business of picking winners and losers, and even if we do want to do that, are we financially in a position to pick any winner or loser in our current shape? >> no, i think this is a perfect example of how when we do have the systems that are broken and the government is steps in and bails out some and not others. that's not fair. the delphi workers, those unionized bailed out. a billion dollars of a package what was it at least $17 billion bailout for the uaw and big three, without which older workers pensions would not be there today. we have a situation, unionized, you got a billion dollars. same companies, nonunionized they got nothing. >> i'll part with this statement. never borrow money to consume it. get good at investing, your

future would be better off and i wouldn't count on this place fixing it until we get our own house in order. >> senator caine. >> thank you, mr. chairman, and thank you to the witnesses. we do things all the time to benefit some people and not the other. and the notion that doing good things is not good if you don't don't do it for everybody. and every program we do target some and then others then. we helped people preserve pensions and was a bad idea because everybody dent get a pension. >> that passed by one vote and protected the pensions of two million workers, that followed up an earlier vote that we did to protect the pension of united mine workers and that number was smaller, but that's a good thingment by protecting those pensions, we actually protect other's pensions as well because it's less likely that those two million, the

failure of those pension plans would drive down the funding levels of pbgc. so others who had pensions that weren't necessarily protected are going to end up protected as well. mr. chair, you probably felt the same way. there can be frustrating days around here and three times i've been here where something happened by one vote, saving the affordable care act happened by one vote. american rescue plan, two million workers pensions happened by one vote, the inflation reduction act, cutting prescription drug costs and advancing a clean energy economy happened by one vote. there are some days you wonder why you're here, on the days when something happens by one vote, you think wow, i'm glad to seek office and be in this place. sometimes it's one person standing up. items i'm working on with the senator, auto reenrollment. we have the auto reenroll bill

that would periodically sweep people in and enroll in their company's plans and give them the ability to opt out. similar to health insurance. we're every year jogging you about health insurance and making you think do you have the right plan or do you want to switch. if we could do that more often on the retirement options that are in place, with employers, i think that would be a great thing and i think it's a bipartisan proposal that i would like us to do. the second one i want to focus on is young workers, this statistic kind of surprised me. 2.7 million americans between the ages of 18 and 20 work full-time hours, 2.7 million americans, but 40% of workplace retirement plans set a minimum age threshold of 21 to be able to participate in retirement plans. we ought to change that to 18. we ought to have workplace retirement plans pick up 18, 19, 20-year-olds that are working and include them in

retirement as well, helping americans save for retirement act and again, i think it's noncontroversial and bipartisan. and then the last thing i'll just say, and i'm one of these people doing four hearings so i'm going to defer back. employee stock ownership, you want to talk about retirement security. 10 million workers that work at east opes end up with some powerful retirement. and there are unusual industries, construction and increasingly you see it in retail, increasingly in some hospitality industries and if we can continue to promote esops through our tax code or through other strategies, i think that's an element in retirement security that can be really, really helpful for american workers and that, mr. chair, i yield back.

>> thank you. >> senator. >> thank you, chairman. so congress has provided explicit instructions to the department of labor on numerous occasions how to encourage americans to save for their retirement. however, the dul's current fiduciary rule proposal directly contradicts these directives if implemented will further respect access, increase cost to consumers, limit personalized financial advice and allow consideration basic investment products, so this approach towards retirement-- retirement invests is incompatible with the current system where individual retirement savers are able to make decisions for themselves. mr. stevenson, do you believe that the dul's proposal is counterproductive to the great bipartisan work as the secure act and secure act 2.0? >> that's a great question. one of the things we've talked about today. financial literacy, more

education and training. in general we know that financial literacy doesn't work and auto enroll, auto escalate, all of those things are powerful. and as a result of dul. it will take our eye off the ball for a long time, stability to implement all you've done around secure act 1.0 and secure act 2.0. it's a major distraction and it's a major expense that those expenses will flow to places that we won't like. >> sounds like a bad idea. mr. stevenson, would you agree with the sentiment in the time when folks are living longer, inflation is rampant, and there's a need to start saving more and saving earlier for retirement, that this rule would leave people worse off? >> it certainly has the potential. there are some challenging parts to it and again, i would just stay to the point around, there's so much power that you

have created in secure act 2.0 and expanding access, expanding, making it easier for small business to do the things that we want them to do. young savers, student loan matching. if we implement those things, we are going to make a huge, huge debt in the challenges we've all talked about today and that rule will really put that at risk for a few years. >> let's talk for a minute, mr. stevenson, about issues that will help my constituents and folks across the country with retirement instead of hurting them, as this rule is likely to do. secure 2.0, it had several incentives to help with start-up costs in employment retirement plans. while these bipartisan measures were important, a simple miscalculation means the tax credit doesn't work for the smallest businesses out there. so i'm working with senator hassan to introduce the senate companion to the bipartisan rise act and what this bill does, it addresses that miscalculation to help offset the smallest businesses and

allows them to offer retirement plans to their employees. so, do you have a positive outlook on whether tax credits like these will actually help boost retirement savings for people? >> they absolutely will. >> can you-- >> just so many americans work in small companies and everything we can do to remove the barrier for launching their 401(k) plan and available to their employees is helpful. we've proven that time and time again. and especially features with auto enroll and auto escalate. that's the pattern. make it easier for them to set it up and the employee to participate. >> thank you, mr. chairman, i yield. >> thank you. i think that's about it. i think on behalf of the whole committee i want to thank all of the panelists. i think we can-- may have strong disagreements about solutions, but we all agree this is a serious problem and needs a discussion and i think we've begun that today. let me thank you for being

here. and i have a hearing today. for any senators who wish to ask additional questions, questions for the record will be due in 10 business days and finally, i ask unanimous consent to enter the record, 10 statements for stake holders, outlining their retirement priorities. so ordered. the committee stands adjourned. thank you very much. [inaudible conversations] [inaudible conversations]

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washington d.c. >> good morning. everyone. thank you for joining us, i'm a senior fellow for