Americans have not saved enough for retirement, and it’s a problem that some are calling a looming crisis as the population continues to age.
President Donald Trump addressed the issue today, signing an executive order that would expand access to retirement savings plans for American workers.
The order asks for a review of how small businesses can more easily join together to offer retirement plans for their workers, and calls for an assessment of how required minimum distributions for 401(k)s and IRAs are calculated.
“It’s time to take care of our people, to rebuild our nation, and to fight for our great American workers,” Trump said in a statement issued by the White House.
In the order, Trump asks the Treasury Department to review its calculations that determine how much an individual must withdrawal from a retirement account.
Currently, retirees must begin taking withdrawals at age 70.5, but that age was based on life expectancy tables generated in 2002, and average life expectancy has risen 1.5 years since that time.
According to the White House, updating the required minimum distribution age would allow Americans to spread their retirement savings over a longer period of time.
The second aspect of the order calls for the Department of Labor to consider issuing new guidance that would enable small businesses to join together to offer their workers retirement plans. Currently, rules dictate that only related business can band together to offer a multiple employer plan.
The White House said the current laws make it harder for workers at small business to gain access to workplace retirement plans, noting that only 53% of businesses with fewer than 100 employees offer plans.
Secretary of Labor Alexander Acosta issued a statement in support of Trump’s order.
"President Trump's Executive Order will help provide greater opportunities for workers to save for the future and retirement. Allowing small and mid-size businesses to come together to sponsor retirement plans for their employees can provide pathways for the financial security of families across our nation,” Acosta said. “The Department embraces the President's goal of making retirement security simpler and more convenient for millions of Americans."
National Association of Home Builders CEO Jerry Howard also weighed in, saying that NAHB commends Trump for making this a priority.
“This need is particularly acute in the residential construction sector, where most home building firms are small businesses with less than 10 employees,” he said. “By continuing to follow through on his pledge to reduce burdensome regulations, the president is taking an important step forward for American workers. The executive order removes needless regulatory barriers that will help more trade groups and small businesses to provide workplace retirement plans for their employees.”
House GOP members are currently working on their own recommendations to enhance retirement savings. The plan will be part of a broader tax legislation currently in the works and is expected to be announced next month.