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State Guaranteed Retirement Accounts a Solution to the United States’ Retirement Crisis

NEW YORK –(ENEWSPF)–December 3, 2012. The United States faces a retirement crisis that threatens future retirees and the next generation of workers. The voluntary employer-sponsored retirement system covers fewer and fewer Americans often leaving Social Security, orginally intended as a supplement to other forms of retirement, as the major source of income for 40 percent of older Americans. Even workers still covered by an employer retirement plan have had their benefits worsen.


A new report from Demos Policy Analyst Robert Hiltonsmith, New School professor Teresa Ghilarducci, and New School economics graduate student Lauren Schmitz, offers a solution in State Guaranteed Retirement Accounts. These low-fee and portable accounts would provide lifelong income, guaranteeing returns of at least 3 percent. They would also limit the excessive fees charged by 401(k)s that erode a worker’s retirement account by as much as 30 percent.

In the absence of a nationwide retirement system to solve the upcoming retirement crisis, State Guaranteed Retirement Accounts would help workers bridge the gap between Social Security and their retirement needs.

“All workers need a supplemental retirement plan that invests their savings efficiently with low costs, earns a secure and sufficient rate of return, and preserves savings for retirement,” said report author and Demos Policy Analyst Robert Hiltonsmith

State Guaranteed Retirement Accounts would expand access and address the critical failures in the existing system by meeting three key criteria for retirement income security:

  • Help workers make adequate retirement account contributions and prevent early withdrawals.
  • Provide low-cost, quality investment vehicles that are professionally managed and help shield individual workers from investment and market risks.
  • Provide a lifetime guaranteed stream of income at retirement.

Creating a nationwide, individual retirement plan that incorporates the goals of adequate contributions, safe and appropriate investments, and lifetime income, would efficiently and practically solve the upcoming retirement crisis. 

But if the nation’s policymakers won’t act, each state can tailor the State Guaranteed Retirement Account plan—which meets all of the above criteria for an efficient and adequate retirement savings plan—to meet their unique needs and to secure retirement income for each state’s workforce.

Source: http://www.demos.org


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