Blackstone's James Calls for Mandatory Retirement Saving
In a bid to save millennials from a “massive retirement crisis,” former president and COO and recently-named executive vice chairman of Blackstone Tony James and New School labor economist Teresa Ghilarducci say employees without pension plans should be required to contribute 1.5% of their earnings into guaranteed retirement accounts, Yahoo Finance writes.
If the current system for retirement saving persists, they say, close to 25 million retirees will be in near-poverty or poverty by 2050, according to the web publication. That’s because people are living longer but saving less, and while Social Security was once sufficient to cover 40% of what was necessary to live a middle-class lifestyle, it now only covers 20%, James tells Yahoo Finance.
Meanwhile, close to half of American workers lack a 401(k) plan, while those who do don’t contribute enough or withdraw funds too early, the web publication writes.
James and Ghilarducci say the required retirement contribution should be capped at $3,750, which is 1.5% for those earning $250,000, according to the web publication. They also say employers should be required to pay only 1.5% of the first $250,000, but that both workers and employers should be able to contribute more, Yahoo Finance writes.
Under their plan, retirement savers would also get a $600 federal tax credit, so that workers earning $40,000 or less would see their entire contribution offset by the tax credit, according to the web publication. Employers would also be able to deduct their contributions, Yahoo Finance writes.