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Blackstone's James Calls for Mandatory Retirement Saving

February 15, 2018

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.

By Alex Padalka
  • To read the Yahoo Finance article cited in this story, click here.