President Obama released his 2010 government budget last week. A few of his proposals could change the way you save and plan for retirement. Here’s a look at some of the provisions likely to affect retirement savers the most.
Increased Social Security funding. The President’s Budget includes $11.6 billion for the Social Security Administration (SSA) in 2010, a 10 percent increase in funding from this year. The higher budget would be used to increase staffing next year and improve the number of initial retirement and disability claims and disability appeals processed. The resources would also be used to increase the frequency with which wages are reported to the SSA, verify hundreds of millions of Social Security numbers, issue about 18 million new Social Security cards, and step up efforts to ensure payments are made to the correct person and in the proper amount.
Automatic pensions. In addition to strengthening Social Security, Obama proposes that all employees be automatically enrolled in workplace pension plans. But nearly half of American workers – an estimated 78 million – currently have no employer-sponsored retirement savings plan, according to the Retirement Security Project. Employers who don’t offer a retirement plan will be required to enroll their workers in a direct-deposit IRA. Employees who don’t wish to participate may opt out.
A government match. Obama’s budget also proposes modifying the existing saver’s tax credit to provide a 50 percent match on the first $1,000 of retirement savings for families that earn less than $65,000. The credit would be fully refundable.
Tell us, will these proposals better prepare Americans for retirement?