Trying to Boost US Saving
Congressional Democrats yesterday put forth a proposal to try to boost the US’s household savings rate, which is extremely low both compared to the past and compared to other countries.
NEW YORK (CNN/Money) – Democratic members of Congress introduced a retirement security plan Tuesday that promises to foster savings among middle- and working-class individuals. The plan, known as AmeriSave, did not include any proposals regarding changes to Social Security.
…Under the plan, working and middle class individuals who participate in a retirement savings program such as a 401(k) or an IRA would have the first $1,000 contributed to their account matched by government funds.
Small businesses that do not currently offer retirement accounts for their workers would receive tax credits that would help cover the cost of administrating a retirement plan.
Another major initiative of the AmeriSave plan would be the reformation of bankruptcy and pension laws that would make it more difficult for corporations to dissolve pension plans.
…Workers would also be able to directly deposit tax refunds into a retirement savings account.
I think that something as simple as making monthly retirement plan contributions the default option for all workers could probably have some significantly positive effects on personal savings in the US. I’m not sure how expensive these specific Democratic proposals would be, and we’d need to know that before we could decide how much sense these proposals make. But it’s nice to know that someone in Washington is at least throwing out some ideas to address the US’s low savings rate – something that I do honestly think is setting the stage for some potentially serious economic problems down the road.