Obama's 7 Retirement Initiatives for the Middle Class

Obama and Biden preview their retirement proposals

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The White House previewed several tax cuts and spending programs yesterday that President Barack Obama will discuss in Wednesday's State of the Union address. Many of the proposals aim to help middle class families prepare for retirement. Here are 7 ways your retirement benefits could soon change.

Automatic IRAs. Employers who do not offer a retirement plan may soon be required to enroll their employees in a direct-deposit IRA unless the worker opts out. New tax credits would help pay employer administrative costs and small firms would be exempt from participation. The administration has also recently streamlined the process for companies to automatically enroll their workers in existing 401(k) plans.

[See Should Saving for Retirement be Required?

Nationwide 401(k) Match. The Saver’s Credit could be expanded to match 50 percent of the first $1,000 of retirement account contributions for families earning up to $65,000 and to provide a partial credit to families earning up to $85,000. This tax credit would also be made refundable for families with no income tax liability.

Outlining 401(k) Fees. The Obama administration supports making 401(k) investment, record-keeping, and other fees more transparent so retirement savers can better choose among investments.

[See 401(k) Fee Disclosure Bill Introduced to Senate.] 

More investment advice. Obama plans to encourage retirement plan sponsors to make unbiased investment advice available to workers and provide protections against conflicts of interest when financial advisers recommend specific products.

[See 401(k) Fee and Advice Legislation Moves Forward.] 

Advancing annuities. Products that guarantee lifetime income, such as annuities, will soon be promoted by the White House as a way to reduce the risk that retirees will outlive their savings.

[See Labor Department Examines 401(k) Withdrawals.] 

A target-date review. The administration plans to review the quality of target-date funds and require more clear disclosures about their risks of losses, fees, and the methodology of their automatic shifts of assets over the course of an individual's lifetime.

Caregiver assistance. The proposed Caregiver Initiative adds $50 million to programs that provide transportation, adult day care, and in-home services such as aides to help seniors bathe and cook. It also would allocate $52.5 million for caregiver support programs that provide temporary respite care and referrals to critical services. The White House says the extra funding will allow nearly 200,000 additional caregivers to be served and 3 million more hours of respite care to be provided.

Tell us, will these initiatives help middle class families to prepare for retirement?