Retirement plans don’t work

Rep. George Miller (D-Calif.) said that the current “go-go, wild west style approach to governing” is severely affecting citizens’ retirement security.

In a hearing held by the House Education and Labor Committee, Miller said, “63 percent of Americans are worried that they will not have enough savings for retirement.” He continued, “one in five middle-aged workers stopped giving funds to their retirement plans in the last year.” In addition, he said $500 billion has been lost from current 401(k) plans in the last year.

Director of the Congressional Budget Office Dr. Peter Orszag said that the current economic crisis is affecting state and local pensions as well. He said $300 billion were lost from those pension between the second quarter of 2007 and the second quarter of 2008. He said workers are taking “unnecessary risk” in that 90 percent have 401(k) plans in their own company’s stock. He said workers need to be given “a strategy of diversification.”

Research Director of the Employee Benefit Research Institute Jack VanDerhei said there are “fundamental flaws” in our current retirement plans. He said that the last few weeks have proven that even large companies can go bankrupt and retirement plans are always at risk. He added that he hopes workers don’t “overreact” to the economic downturn and continue to contribute money to their retirement plan.

Rep. Yvette Clark (D-N.Y.) said that the public is “in a state of shock.” “We’re in the midst of a reorganization of the financial system,” said Clarke in reaction to the failing economic system.