Roberta Tim Quan, 74, a retired elementary school educator in San Pablo, Calif., recently sustained a loss of $38,000 in her 403(b) retirement account. "My situation is in shambles, with expenses exceeding income," she said at a congressional hearing about retirement security this morning. "I am retired and unable to re-earn the lost funds."
Quan, like many retirees who have experienced catastrophic losses in their retirement accounts, is looking for the government to provide some answers. But how the government should address the retirement needs of retirees who suffered market losses is hotly debated.
Fully funding Social Security in its current form to ensure that Americans receive their guaranteed benefits is a desired government response for 57 percent of Americans, according to a Transamerica Center for Retirement Studies survey of 3,258 Americans ages 18 and up in early September. But other ideas to ease the burdens of retirement planning vary widely, and none was overwhelmingly supported by a majority of the survey respondents. Here's a look at some other roles survey respondents suggested the president and Congress should play in retirement planning.
The top priorities the new president and Congress should focus on to help Americans achieve a financially secure retirement:
- Fully fund Social Security in its current form to ensure Americans receive their guaranteed benefits (57 percent)
- Implement a financial literacy curriculum in the schools (34 percent)
- Encourage 401(k) plans to offer to pay benefits in a form that guarantees retirees a set level of monthly income, regardless of how long they live (28 percent)
- Provide tax credits to workers earning up to $50,000 of annual income who make contributions to an IRA, 401(k), or 403(b) plan (26 percent)
- Provide incentives for the purchase of long-term care insurance (24 percent)
- Ensure that all workers have the ability to contribute to a 401(k) or other retirement plan (21 percent)
- Ensure that all workers not covered by a 401(k) or similar plan have the ability to make regular IRA contributions at the workplace through payroll deduction (20 percent)
- Privatize Social Security by creating individual savings accounts (18 percent)
- Encourage financial education at the workplace through employer incentives and other reforms (15 percent)
- Other (18 percent)
Source: Transamerica Center for Retirement Studies, 2008.
"It should be noted that the survey was fielded several weeks ago, before the historic storm that has struck the financial markets," says Catherine Collinson, president of the nonprofit Transamerica Center for Retirement Studies. "Since then, Americans are without a doubt even less confident and have increased their expectations of the next president and Congress to address their concerns."
A correlation emerged in the survey between political party affiliation and retirement confidence. More than half of Democrats (53 percent) and 48 percent of independents feel less confident in their ability to achieve a financially secure retirement than they did 12 months ago, compared with only 34 percent of Republicans. But backers of both parties listed preserving Social Security in its current form as a top priority. Some 65 percent of Democrats believe the administration should fully fund Social Security and ensure Americans receive their guaranteed benefits, compared with 49 percent of Republicans and 58 percent of independents. Conversely, 31 percent of Republicans are open to the privatization of Social Security by creating individual savings accounts, compared with 10 percent of Democrats and 16 percent of independents.
Overall, Republicans view their retirement prospects as slightly rosier than Democrats see theirs, according to the survey. Some 63 percent of Republicans expressed confidence in their ability to retire comfortably, compared with 52 percent of Democrats and 54 percent of independents.
Here's a look at Barack Obama's and John McCain's plans for your retirement accounts.