On Friday, September 9, 2011, Aspen Institute Initiative on Financial Security’s (Aspen IFS) Executive Director, Lisa Mensah, moderated a Capitol Hill briefing on ‘Rethinking Incentives to Save for a Secure Retirement.’ The bicameral briefing, co-sponsored by the Senate Special Committee on Aging and the Brookings Institution, featured a panel of the nation’s leading experts on tax, retirement, and budget policy and explored new ways to help Americans save more for their retirement years without increasing government spending.
The event featured discussants William Gale, Senior Fellow at the Brookings Institution, Co-Director of the Urban-Brookings Tax Policy Center, and Director of the Retirement Savings Security Project; and David John, Senior Research Fellow in Retirement Security and Financial Institutions in the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation.
Gale started by pointing out that Americans –especially low- and middle-income workers– are simply not saving enough for their retirement. The current retirement income deficit– the gap between what Americans will need in retirement and what they will actually have– is insurmountable without a significant change to current tax policy to help incentivize more Americans to save for their own retirement. To that end, both panelists moved on to discuss Gale’s proposal to replace current retirement savings deductions for contributions to retirement savings accounts with a flat-rate refundable credit that would be deposited directly into savers’ accounts. The discussion centered around two timely issues–addressing long-standing concerns in the retirement saving system by improving incentives for more households to participate, and considering broad-based tax reform that does not add to the country’s long-term fiscal deficit.