View this email in your browser

**APRIL 19, 2021**

Kuttner on TAP

Retirement Income for the Poor

****

Our friend Teresa Ghilarducci has come up with a terrific way of
improving retirement income for low- and middle-income elderly people,
who increasingly risk poverty in old age as pension systems collapse and
401(k) plans are a proven failure. The idea is to allow everyone to buy
into the federal employees' Thrift Savings Plan, with some kind of
government match, especially for poor people.

For more than a decade, Ghilarducci, an economist and retirement expert
at The New School, has been promoting variations on what she dubbed
Guaranteed Retirement Accounts (GRAs). These would be portable accounts
partly subsidized by government for lower-income people.

The idea was ingenious, but failed to gain political traction. This idea
is better
.

Federal employees are among the last group of workers with a reliable
pension plan. If you work for the U.S. government, you are automatically
enrolled in the Thrift Savings Plan. Five percent of your pay goes into
the plan, matched by the government. The assets are invested on a pooled
basis in one of five plan options, and the management fees are almost
nonexistent-about 0.04 percent compared to around 1 percent for
conventional individual retirement accounts.

If others could join the Thrift Savings Plan, with government matching
contributions, nearly everyone could have retirement accounts well into
six figures by the time they hit retirement age. Many conservatives like
this, because they like the idea of everyone being a capitalist.

Ghilarducci's co-author on this plan is Kevin Hassett, a
well-established conservative economist who chaired Donald Trump's
Council of Economic Advisers. (Hassett also published a book in 1999
promoting stock bubbles, incautiously titled

**Dow 36,000**. This forecast was overtaken by two stock market crashes.
The Dow is now over 34,000. You might call Hassett prescient. Barring
another crash-he was 22 years early.)

There are a couple of key details in the Ghilarducci-Hassett plan still
to be worked out. First, these accounts would only begin accumulating
serious money after a few decades, but people nearing retirement during
the next 20 years are still risking poverty. In the meantime, they need
more income. Topping up Social Security checks, as Sen. Elizabeth Warren
has proposed
,
is a good interim step.

Second, even with the incentive of a government match, most poor people
simply have no spare money to save. Ghilarducci's earlier GRA plan had
the government reimburse individual contributions to these plans, using
refundable tax credits, for people with incomes up to 40,000. This new
idea needs to do the same, or the participation rate among those who
need it most would be far too low.

It's great that Biden is focusing on long-term care and the caregiving
infrastructure. Let's not forget about plain old poverty among the
aged.

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

Robert Kuttner's latest book is
The Stakes: 2020 and the Survival of American Democracy
.

[link removed]

The Alt-Labor Chronicles: America's Worker Centers

A Prospect series on how day laborers, domestics, fry cooks, and others
have built institutions and won power to better their lives. BY HAROLD
MEYERSON

How the Powerless Win Power

Immigrant workers-particularly the undocumented-are denied
basic rights, but through worker centers, they've aggregated their
strength and bettered their lives. BY MICHELLE CHEN

Why Biden Should Increase the Refugee Resettlement Cap

After Trump's nativism, Biden has the chance to reclaim U.S.
leadership. BY REVA DHINGRA

Cleaning Up Electricity
A
federal energy efficiency and clean electricity standard is doable, but
getting one through Congress won't be easy. BY GABRIELLE GURLEY

First 100: The Refugee Cap Debate Shows the Left's Role in the Biden
Coalition

Also, rolling back the corporate tax increase. BY DAVID DAYEN

To receive this newsletter directly in your inbox, click here to
subscribe. 

[link removed]

 

[link removed]

 

[link removed]

 

[link removed]

 

[link removed]

 

[link removed]

 

[link removed]

YOUR TAX DEDUCTIBLE DONATION SUPPORTS INDEPENDENT JOURNALISM

Copyright (c) 2021 The American Prospect. All rights reserved.
_________________

Sent to [email protected]

Unsubscribe:
[link removed]

The American Prospect, Inc., 1225 I Street NW, Suite 600, Washington, DC xxxxxx, United States