[Senate Hearing 112-582]
[From the U.S. Government Publishing Office]






                                                        S. Hrg. 112-582


   RETIREMENT (IN)SECURITY: EXAMINING THE RETIREMENT SAVINGS DEFICIT

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                            ECONOMIC POLICY

                                 of the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                                   ON

    EXAMINING THE CURRENT GAP BETWEEN WHAT AMERICANS WILL NEED FOR 
 RETIREMENT AND WHAT THEY ARE ON TRACK TO SAVE, REVIEWING THE SIZE AND 
SCOPE OF THIS GAP AND HOW THE RECENT ECONOMIC CRISIS AND OTHER ECONOMIC 
 FACTORS HAVE IMPACTED THIS DEFICIT AND AMERICANS' RETIREMENT SAVINGS 
                              AND SECURITY

                               __________

                             MARCH 28, 2012

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs




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            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                  TIM JOHNSON, South Dakota, Chairman

JACK REED, Rhode Island              RICHARD C. SHELBY, Alabama
CHARLES E. SCHUMER, New York         MIKE CRAPO, Idaho
ROBERT MENENDEZ, New Jersey          BOB CORKER, Tennessee
DANIEL K. AKAKA, Hawaii              JIM DeMINT, South Carolina
SHERROD BROWN, Ohio                  DAVID VITTER, Louisiana
JON TESTER, Montana                  MIKE JOHANNS, Nebraska
HERB KOHL, Wisconsin                 PATRICK J. TOOMEY, Pennsylvania
MARK R. WARNER, Virginia             MARK KIRK, Illinois
JEFF MERKLEY, Oregon                 JERRY MORAN, Kansas
MICHAEL F. BENNET, Colorado          ROGER F. WICKER, Mississippi
KAY HAGAN, North Carolina

                     Dwight Fettig, Staff Director

              William D. Duhnke, Republican Staff Director

                       Dawn Ratliff, Chief Clerk

                     Riker Vermilye, Hearing Clerk

                      Shelvin Simmons, IT Director

                          Jim Crowell, Editor

                                 ______

                    Subcommittee on Economic Policy

                     JON TESTER, Montana, Chairman

           DAVID VITTER, Louisiana, Ranking Republican Member

MARK R. WARNER, Virginia             ROGER F. WICKER, Mississippi
KAY HAGAN, North Carolina            MIKE JOHANNS, Nebraska
TIM JOHNSON, South Dakota

             Alison O'Donnell, Subcommittee Staff Director

         Travis Johnson, Republican Subcommittee Staff Director

                                  (ii)










                            C O N T E N T S

                              ----------                              

                       WEDNESDAY, MARCH 28, 2012

                                                                   Page

Opening statement of Chairman Tester.............................     1

Opening statements, comments, or prepared statements of:
    Senator Vitter...............................................     2
    Senator Akaka................................................    14

                               WITNESSES

Michael Calabrese, Senior Research Fellow, New America Foundation     3
    Prepared statement...........................................    20
Jack Vanderhei, Ph.D., Director of Research, Employee Benefit 
  Research Institute.............................................     5
    Prepared statement...........................................    32
James G. Rickards, Senior Managing Director, Tangent Capital 
  Partners, LLC..................................................     7
    Prepared statement...........................................    88

              Additional Material Supplied for the Record

Prepared statement submitted by the Financial Services Roundtable   101
Prepared statement submitted by the AARP.........................   104
Putnam Investments paper: ``Resisting the policy threat to 
  retirement savings''...........................................   119
Prepared statement submitted by the American Council of Life 
  Insurers.......................................................   127

                                 (iii)

 
   RETIREMENT (IN)SECURITY: EXAMINING THE RETIREMENT SAVINGS DEFICIT

                              ----------                              


                       WEDNESDAY, MARCH 28, 2012

                                       U.S. Senate,
                           Subcommittee on Economic Policy,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Subcommittee convened at 2:32 p.m., in room 538, 
Dirksen Senate Office Building, Hon. Jon Tester, Chairman of 
the Subcommittee, presiding.

            OPENING STATEMENT OF CHAIRMAN JON TESTER

    Senator Tester. I want to call to order this hearing of the 
Economic Policy Subcommittee, a hearing titled, ``Retirement 
Security,'' or maybe I should say ``Insecurity: Examining the 
Retirement Savings Deficit.''
    I look forward to hearing from our witnesses this afternoon 
about the retirement savings deficit in America, that is, the 
shortfall between what Americans are saving for retirement and 
what they will need to live comfortably in retirement.
    The facts are a bit unsettling. The most often cited 
studies peg the size of this deficit in the trillions of 
dollars. Only 14 percent of the folks are confident that they 
will have enough money to live comfortably in retirement. The 
majority of working adults, more than 75 million workers, do 
not participate in any private retirement savings plan at all, 
and according to a recent report from one of our witnesses, the 
majority of American workers has not even tried to calculate 
how much they will need to save for retirement.
    For some time, trends have indicated that Americans have 
been saving less, participating less in retirement savings 
plans, and living longer. We cannot escape our demographics, 
and we know that the retirement of the Baby Boomers will place 
additional strains on Social Security and Medicare.
    But we find ourselves confronting an even greater 
retirement security challenge today. In 2008, the financial 
crisis, the economic meltdown that followed, and the decline in 
housing values have, not surprisingly, widened the retirement 
savings gap and aggravated many Americans' sense of insecurity 
about retirement. Workers unable to find jobs due to the weak 
economy do not contribute to employer-provided retirement 
plans, reducing future retirement income and security. Market 
conditions not only impacted retirement assets and 
accumulation, but also hurt enrollment in retirement savings 
plans. And the bursting of the housing bubble effectively ended 
our ability to rely on the ever-increasing home values to 
provide retirement security.
    The implications of the economic crisis for workers are 
clear. Americans must work longer, save more, or spend less in 
retirement in order to retire with sufficient retirement 
savings.
    We spend an awful lot of time here in the Senate focused on 
how to reduce our deficit and strengthen Social Security and 
Medicare, but the bottom line is that regardless of any 
potential changes to these programs, Americans are simply not 
saving enough for retirement.
    Since 2008, we have taken steps to improve the economy and 
restore confidence in capital markets, but we still have work 
to do to address this retirement savings challenge. And before 
that savings deficit grows much further, we have an opportune 
moment to take a closer look at this issue. We will examine the 
retirement savings gap, its nature and scope, and what the 
major trends are. We will consider the impact of the economic 
crisis on workers' savings and security and what the economic 
impact is of the growing retirement savings gap on capital and 
labor markets. And we will see how workers have responded and 
what that means about what we can expect as the Baby Boomer 
generation heads into retirement and better understand what 
some of the more effective and efficient strategies are to 
encourage greater retirement savings so that workers can 
confidently take retirement planning into their own hands.
    It is a complicated issue, but today's hearing really gives 
us a chance to look more closely at a critical issue of 
retirement savings and security in hopes that we can all come 
away with a keener sense of the scope, scale of the problem, 
and come to grips with it.
    With that, I turn it over to my friend, Senator Vitter, for 
his opening statement.

               STATEMENT OF SENATOR DAVID VITTER

    Senator Vitter. Thank you, Senator Tester, for calling this 
hearing. It certainly is a very, very important topic. And 
welcome and thanks to all of our witnesses. I look forward to 
mostly listening and I appreciate you all being here and 
offering your thoughts.
    This is a very serious concern and a very serious challenge 
and I would invite you all to offer your thoughts on as wide a 
range of helpful areas as possible, certainly including the 
following. I am concerned, along with others, that one real and 
significant impact of the Fed's prolonged zero interest rate 
policy is a real hit on retirees and others who depend on that 
sort of investment and interest income, if you all could 
comment on that.
    Certainly, any thoughts you have on Social Security reform. 
We need Social Security reform, first of all, to ensure the 
continued viability and solvency of the system, but I also 
think we need expanded flexibility and some new models and new 
options to offer folks who are in their working years now to 
build toward retirement.
    And finally, tax policy and what we can do in the tax area. 
Some obvious examples, like increasing IRA limits, but there 
are other things, as well, and I would invite any ideas you 
have in that area.
    And with that, I will be all ears and look forward to your 
comments. Thank you.
    Senator Tester. Thank you, Senator Vitter.
    I would like to welcome our witnesses, a distinguished 
panel of scholar and experts on retirement issues, and I want 
to thank you for your willingness to testify this afternoon.
    First, Mr. Calabrese is a Senior Research Fellow affiliated 
with the asset-building program at the New America Foundation 
located right here in Washington, D.C. Previously, Mr. 
Calabrese served as General Counsel of the Congressional Joint 
Economic Committee, Director of the Domestic Policy Programs at 
the Center for National Policy, and as a pension employee 
benefits counsel at the national AFL-CIO. Welcome, Mr. 
Calabrese.
    Next, we have Dr. VanDerhei, who is a Research Director of 
the Employee Benefit Research Institute, EBRI, a Washington-
based private, nonprofit organization conducting public policy 
research and education on economic security and employee 
benefits. He is also the Director of both the EBRI Defined 
Contribution and Participant Behavior Research Program and the 
EBRI Retirement Security Research Program. Welcome, Mr. 
VanDerhei.
    And last but certainly not least, we have Mr. Rickards, and 
he is the Senior Managing Director of Tangent Capital Partners, 
an investment bank based in New York specializing in 
alternative asset management solutions. He is a counselor, 
economist, and investment advisor with 35 years of experience 
with several firms, including Citibank, RBS, Long-Term Capital 
Management, and Caxton Associates, and I want to welcome you, 
Mr. Rickards.
    Each witness will have 5 minutes for oral statements and 
their written testimony will be made a part of the record in 
its complete.
    So with that, Mr. Calabrese, would you please get us 
started.

  STATEMENT OF MICHAEL CALABRESE, SENIOR RESEARCH FELLOW, NEW 
                       AMERICA FOUNDATION

    Mr. Calabrese. OK. Good afternoon. Thank you, Mr. Chairman 
and Senator Vitter, for this opportunity to testify. It is 
great to see that this Subcommittee is taking up this important 
topic.
    There is no question that a widening retirement savings gap 
is creating widespread insecurity. Most individuals are simply 
not saving enough over their working life to supplement the 
meager benefits that they will receive from Social Security.
    One barometer, the National Retirement Risk Index, 
indicates that a majority, 51 percent, of working-age 
households are at risk of not having enough retirement income 
to maintain their pre-retirement level of consumption. Most 
worrisome are adults over 45. The index shows 41 percent of 
early Boomers and 48 percent of late Boomers are at risk.
    These shortfalls represent the cumulative trillions that 
the Chairman mentioned. They estimated a couple of years ago a 
$6.6 trillion retirement income deficit, which is according to 
the Center for Retirement Research, which created the index. 
This $6.6 trillion is roughly $22,000 per capita and represents 
the present value of the saving and investment shortfall needed 
to ensure, on average, retirement security for every American.
    What accounts for this enormous savings gap? I believe 
America's real retirement security crisis is not Social 
Security solvency or the many big firms terminating or freezing 
their traditional pension plans. The larger problem is that a 
majority of working adults do not participate in any retirement 
saving plan, whether a traditional pension, 401(k), or IRA. 
Participation in employer-sponsored plans peaked in the late 
1970s and appears to be at its lowest level in more than 30 
years. Employer-sponsored plans cover fewer than half of all 
private sector workers, leaving a projected majority of Boomers 
possibly more dependent on Social Security than their parents' 
generation is today.
    Coverage and participation rates are also strikingly lower 
among workers who are low-income, young, work part-time, or 
work at small firms. The result of excluding half the Nation 
from automatic workplace saving is that nearly two-thirds of 
those 65 and older rely on Social Security for a majority of 
their income and 40 percent rely on Social Security for 90 
percent or more of their income, a dependency ratio that is 
even greater for widows.
    Not surprisingly, the lowest earning 40 percent of working 
adults are accumulating very little in the way of financial 
assets. Elderly and the lowest-income quintile receive, on 
average, only about 5 percent of their income from either 
pension or assets. And because retirees with low career 
earnings receive minimal Social Security benefits, about a 
third of the elderly on Social Security fall below the 
individual poverty line.
    So how are America's seniors coping with this savings 
deficit? For those 65 and older, rising income from remaining 
in or reentering the workforce is replacing steadily declining 
income from nonpension assets. Since the mid-1980s, the share 
of income for Americans 65 and older coming from wages has 
doubled, while the share from asset income has plummeted to 
about 12 percent, the lowest level in half a century.
    This trend toward more wage income for seniors seems to 
confirm opinion surveys showing that a steadily growing portion 
of the workforce will at least try to continue to work at least 
part-time beyond normal retirement age. And while working past 
age 65 or 70 may not seem so bad to us, according to a McKinsey 
study, in 2007, nearly half of all Boomers were working in 
physically demanding jobs, including 18 percent in construction 
and production jobs, and another 14 percent in physically 
demanding service sector jobs, such as police, fire, and food 
production. Only 21 percent of Boomers are professionals.
    While remaining employed will help compensate for rising 
disparity in ownership of income-producing assets, it will also 
impact labor markets by potentially reducing the availability 
of work opportunity and rising real wages for younger workers.
    The single most important thing policymakers can do to 
narrow this retirement savings gap is facilitate access to 
automated payroll deduction savings plans accessible to all. 
The fact that so few workers save regularly in IRAs reinforces 
what demonstration projects in asset building among low-income 
families have found, that it is not primarily access to savings 
accounts that spur participation, but what I call the four 
``I''s: Inclusion, incentives, infrastructure, and inertia.
    So I will just wrap up by explaining what I mean by this. 
By inclusion, I mean eligibility and design criteria that allow 
every working adult not currently able to participate in a 
qualified employer plan to contribute. We need stronger tax 
incentives for saving that are more targeted toward lower-
income earners who find it most difficult to save and whose 
savings actually add to net national saving. We need an 
account-based infrastructure that enables every worker to save 
by automated payroll deduction and facilitates career-long 
account portability. And finally, we need default options that 
convert myopia into positive inertia through automatic 
enrollment and payroll deduction, automatic escalation, 
automatic asset allocation, automatic rollovers, and automatic 
annuitization.
    At the end of my testimony, I also mention some other 
options for encouraging saving across the lifetime, such as 
children's savings accounts, but I will stop there. Thank you.
    Senator Tester. Thank you, Mr. Calabrese.
    Dr. VanDerhei.

   STATEMENT OF JACK VANDERHEI, Ph.D., DIRECTOR OF RESEARCH, 
              EMPLOYEE BENEFIT RESEARCH INSTITUTE

    Mr. VanDerhei. Mr. Chairman, Mr. Ranking Member, Members of 
the Subcommittee, I am Jack VanDerhei, Research Director of the 
Employee Benefit Research Institute. EBRI is a nonpartisan 
institute that has been conducting original research on 
retirement and health benefits for the past 34 years. EBRI does 
not take policy positions and does not lobby.
    My testimony today will focus on the size of Americans' 
retirement saving gap, the extent to which its deficit has been 
impacted by economic conditions over the past several years, 
and the most effective strategies to encourage and facilitate 
greater savings for retirement. The testimony draws on 
extensive research conducted by EBRI on these topics over the 
past 13 years with its Retirement Security Projection Model as 
well as annual analysis of behavior of tens of millions of 
individual participants from tens of thousands of 401(k) plans 
dating back in some cases as far as 1996.
    Measuring retirement income adequacy is an extremely 
important and complex topic, and EBRI started to provide this 
type of measurement in the late 1990s. Figure 1 of my written 
testimony shows that when we modeled the Baby Boomers and Gen 
Xers earlier this year, 43 to 44 percent of the households were 
projected to be at risk of not having adequate retirement 
income for even basic retirement expenses plus uninsured health 
care costs. Even though this number is quite large, the good 
news is that it is five to 8 percentage points lower than what 
we found in 2003. It would be my pleasure to explain in more 
detail later why American households are better off today than 
they were 9 years ago, even after the financial and real estate 
market crises in 2008 and 2009.
    Who is most at risk? Figure 2 in my testimony shows that, 
not surprisingly, lower-income households are much more likely 
to be at risk for insufficient retirement income. The 2012 
baseline at-risk ratings for early Boomers range from 87 
percent for the lowest-income households to only 13 percent for 
the highest-income households.
    Figure 4 shows the conditional average retirement income 
deficits by age, family status, and gender for Baby Boomers and 
Gen Xers. The average individual conditional deficit number 
ranges from approximately $70,000 for families to $95,000 for 
single females and $105,000 for single females. In aggregate 
terms, that would be $4.3 trillion for all Baby Boomers and Gen 
Xers in 2012.
    Last year, EBRI published a report analyzing the percentage 
of U.S. households who became at risk of insufficient 
retirement income as a result of the financial market and real 
estate market crisis in 2008 and 2009. As one would expect, the 
answer to this question depends to a large extent on the size 
of the account balance the household had in defined 
contribution plans and/or IRAs as well as their relative 
exposure to fluctuations in the housing market. The resulting 
percentages of households that would not have been at risk 
without the 2008-2009 crisis that ended up at risk varies from 
a low of 3.8 percent to a high of 14.3 percent.
    It is difficult to imagine any voluntary strategy more 
effective at dealing with retirement income security than 
increasing the likelihood of eligibility in a qualified 
retirement plan. Figure 8 of my written testimony shows the 
importance of defined benefit plans for retirement income 
adequacy, and Figure 9 shows a similar analysis for 401(k) 
plans. We see that the number of future years the workers are 
eligible for participation in a defined contribution plan makes 
a tremendous difference in their at-risk ratings, even after 
adjusting for the worker's income quartile. When the results 
for Gen Xers were aggregated across all income categories, 
those with no future years of eligibility are simulated to run 
short of money 61 percent of the time, whereas those with 20 or 
more years of future eligibility would only experience this 
situation 18 percent of the time.
    EBRI research has shown repeatedly the traditional type of 
401(k) plan under current tax incentives has the potential to 
generate a sum that, when combined with Social Security 
benefits, would replace a sizable portion of the employee's 
pre-retirement income for those with continuous coverage. Our 
research has also shown that the automatic enrollment type of 
401(k) plan, when combined with automatic escalation 
provisions, appears to have the potential to produce even 
larger retirement accumulations for most of those covered by 
such plans.
    Recently, however, there have been proposals to modify the 
existing tax incentives for defined contribution plans by 
either capping the annual contributions or changing the before-
tax nature of employee and employer contributions in exchange 
for a Government-matching contribution. In September of 2011, 
the Senate Finance Committee held a hearing that focused to a 
large extent on the second type of proposal. EBRI presented 
preliminary evidence at that time of the possible impact of 
such a proposal on future 401(k) accumulations.
    In recent months, results from two surveys have allowed 
EBRI to more precisely model these effects in view of a 
specific proposal, and last week, we published our new results 
showing the average percentage reductions in 401(k) account 
balances at retirement age due to expected modifications of 
plan sponsors and participants in response to this proposal. 
Figure 17 in my written testimony shows a 22 percent reduction 
in 401(k) balances at retirement for those currently 26 to 35 
in the lowest-income quartile, and those are the ones who are 
most at risk for insufficient retirement income.
    The results are even more dramatic for small plans. Figure 
18 in my testimony shows the average reduction for the lowest-
income quartile in the two smallest plan size categories are 36 
and 40 percent.
    In conclusion, given that the financial fate of future 
generations of retirees appears to be so strongly tied to 
whether they are eligible to participate in employer-sponsored 
retirement plans, the logic of modifying either completely or 
marginally the incentive structure of employees and/or 
employers for defined contributions plans at this time needs to 
be thoroughly examined. The potential increase of at-risk 
percentages resulting from either employer modifications to 
existing plans or a substantial portion of low-income 
households decreasing or eliminating future contributions to 
savings plans needs to be analyzed carefully when considering 
the overall impact of such proposals.
    Thank you, and I look forward to your questions.
    Senator Tester. Thank you, Dr. VanDerhei.
    Mr. Rickards.

   STATEMENT OF JAMES G. RICKARDS, SENIOR MANAGING DIRECTOR, 
                 TANGENT CAPITAL PARTNERS, LLC

    Mr. Rickards. Mr. Chairman and Mr. Ranking Member and 
Members of the Subcommittee, thank you for inviting me to 
testify today, and I appreciate this opportunity to speak to 
you on a subject of the utmost importance to the U.S. economy.
    A significant portion of income security for retirees comes 
from earnings on savings. While savings themselves are 
important, it is the earnings on the savings compounded over 
decades that makes the difference between a comfortable 
retirement and barely getting by. Since retirees properly favor 
safe investments, such as certificates of deposit and money 
market funds, over risky investments, such as stocks, it 
follows that Federal Reserve interest rate policy is a key 
determinant of the adequacy of retirement income security.
    The Federal Reserve lowered interest rates to zero in 
December 2008 and rates have remained at that level ever since. 
The Fed has declared an intention to keep short-term interest 
rates near zero through late 2014. Keeping rates near zero for 
6 years is unprecedented. It should come as no surprise that an 
unprecedented policy should have unprecedented results.
    There is evidence that the Fed's policy is leaving the U.S. 
economy worse off when compared to a more normalized interest 
rate regime. Some of these deleterious effects on retirement 
income security include the following.
    The zero rate policy represents a wealth transfer from 
retirees and savers to banks and leveraged investors. The zero 
rate policy deprives retirees of income and depletes their net 
worth through inflation. This lost purchasing power exceeds 
$400 billion per year and cumulatively exceeds $1 trillion 
since 2007.
    The zero rate policy is designed to inject inflation into 
the U.S. economy. However, it signals the opposite. It signals 
the Fed's fear of deflation. Americans understand this signal 
and hoard savings, even at painfully low rates.
    The Fed's zero rate policy is designed to keep nominal 
interest rates below inflation, a condition called ``negative 
real rates.'' This is intended to cause lending and spending, 
as the real cost of borrowing is negative. For savers, the 
opposite is true. When real returns are negative, the value of 
savings erodes. This is a non legislated tax on savers. The 
Fed's policy says to savers, in effect, if you want a positive 
return, invest in stocks. This gun to the head of savers 
ignores the relative riskiness of stocks versus bank accounts. 
Stocks are volatile, subject to crashes, and not right for many 
retirees. To the extent many are forced to invest in stocks, a 
new bubble is being created.
    Solutions are straightforward. The Fed should raise 
interest rates immediately by one-half of 1 percent and signal 
that other rate increases will be coming. The Treasury should 
signal that they support the Fed's move and support a strong 
dollar, as well. The Fed and Treasury should commit to 
facilitate the conversion of savings into private sector 
investment by closing or breaking up too-big-to-fail banks. 
This will facilitate the creation of clean new banks capable of 
making commercial loans to small businesses and entrepreneurs.
    The result over time would be to replace a consumption and 
debt-driven economy with an investment-driven economy that 
rewards prudence and protects the real value of the hard-earned 
assets of retirees. It is false to suppose that monetary policy 
is a choice between encouraging savings, which reduces 
aggregate demand, and discouraging savings to increase 
aggregate demand. In a well-functioning banking system, savings 
can be a source of real returns for savers and a source of 
aggregate demand through investment.
    As late as the 1980s, money-center banks operating through 
syndicates made 7-year commercial loans to finance massive 
private sector investments in projects like the Alaska 
pipeline, new fleets of Boeing 747 aircraft, and other critical 
infrastructure. These projects were financed with the savings 
of everyday Americans, including retirees. Savers received a 
positive return on their money.
    Today, the United States does not have a well functioning 
banking system because of regulatory failures by the Fed. The 
conveyor belt between savings and investment provided by the 
banks is broken. With the repeal of Glass-Steagall in 1999 and 
derivatives regulation in 2000, the door was opened to break 
down traditional lending functions and allow banks to become 
leverage machines for securitization and proprietary trading. 
Securitization breaks the bond between lender and borrower 
because the bank cares only about selling the loans, not 
collecting on them at maturity. This destroys the incentive to 
allocate capital to the most productive long-term uses. 
Productive private sector investment and capital formation have 
been the victims.
    It is not too late to turn back from the Fed's inflationary 
policies and restore the link between savings and investment. 
The path to improved income security for retirees consists of 
raising interest rates in stages to provide positive real 
returns to savers, breaking up too-big-to-fail banks that pose 
systemic risk, offering real price stability. Two percent 
inflation is not benign, it is cancerous.
    The United States is mired in a swamp of seemingly 
unpayable debt. In these circumstances, there are only three 
ways out: Default, inflation, and growth. The first is 
unthinkable. The second is the current path that the Fed is 
pursuing in stealth. The third is the traditional path of the 
American people. Growth does not begin with consumption. It 
begins with investment.
    America's retirees are ready, willing, and able to provide 
the savings needed to fuel investment and growth. All they ask 
in return is stable money, positive returns, and a friendly 
investment climate. The Fed's policy of money printing and 
negative returns is anathema to investment and growth. Until 
the Fed's war on savers is ended, income security for retirees 
will be an illusion.
    Thank you for this opportunity to testify and I look 
forward to any questions.
    Senator Tester. Well, thank you, Mr. Rickards. I thank you 
and thank all of the panelists for their testimony and 
insights. It is very much appreciated.
    I would ask the Clerk to put 7 minutes on the clock, if you 
might. I think we will have enough time to get through most all 
the questions that folks have.
    I am going to start with a 30,000-foot perspective of the 
problem of retirement security and it goes to all of you, to 
help us get a broad picture of the savings deficit. Clearly, 
one of the biggest challenges is the fact that so many 
Americans are not asking themselves the question about how much 
am I going to need when I get to retirement. And they may not 
be asking other questions along with that as they go forth. And 
so ignorance may be bliss, but I doubt it. How can we get 
Americans to start asking themselves the question about 
retirement savings and how much are they going to need for the 
future, and we will start with you, Mr. Calabrese.
    Mr. Calabrese. Well, of course, education----
    Senator Tester. I need you to turn your microphone on. 
Thank you.
    Mr. Calabrese. OK. It is. One thing, and I am sure Dr. 
VanDerhei will speak more about it, there has been an effort in 
the private sector to do an education campaign, which I think 
has been very useful, but, of course, it is not reaching far 
enough, obviously.
    The better way would be to start in the schools, that 
really, we should find a way, and I do not know exactly how to 
do this, given the local character of education, whether there 
is some sort of Federal impetus for this or not, but we should 
really be building these days into middle and high school 
education some sort of financial literacy because there have 
been recent surveys done that show that the majority of 
American adults do not comprehend compound interest at all, 
cannot even calculate interest in many respects.
    And so people just need to really understand these concepts 
better, and this is a much different world now than, say, 50 
years ago, where you really do need to understand some of these 
things as a basic, you know, just to get by in life. And so I 
think building that financial literacy into a high school 
education would be a really important first step, in addition 
to the things that Jack had mentioned that the private sector 
is doing.
    Senator Tester. Dr. VanDerhei.
    Mr. VanDerhei. Well, I certainly agree with that. I do 
think it is very important, though, that the kind of 
information that people who have to make those decisions 
today--while I completely agree that for people still in the 
educational modality, they should get that type of training, 
but we have a situation today where only 42 percent of 
individuals that we have surveyed virtually every year for the 
past 20 have even attempted to make a guess at what they need 
for retirement.
    This is becoming a very difficult type of assessment for 
many individuals as you realize. When people primarily had 
defined benefit plans and Social Security, it was relatively 
easy to figure out whether or not they were on track. Today, as 
more and more of them are going to defined contribution, they 
are ending up with a lump sum account balance and many of them 
have great difficulties trying to make the calculation of what 
would that lump sum buy me in terms of monthly income when I 
hit retirement age.
    There are several proposals available as far as how one 
could go about doing that, but until we get to the point where, 
indeed, the vast majority of individuals do have that financial 
literacy, I think it is incumbent upon employers, providers, 
people in the public policy research section to try to come up 
with relatively easy to operate Web sites that could very 
quickly let somebody know whether or not they are on track, if 
they are not on track, how much more do they need to start 
saving each year, and let them do the ``what if'' scenarios 
between should I push back retirement age, should I increase my 
contribution today. Get something that is easy for people to 
understand so they will actually go and use it and start asking 
more questions.
    Senator Tester. OK. Mr. Rickards.
    Mr. Rickards. Senator, the fellow panelists have mentioned 
various measures to encourage savings and design features to do 
that, such as automatic enrollment, and I applaud that. But 
your question, which is very straightforward, how much am I 
going to need, there are tried and true methods for calculating 
that. You go to your financial advisor. They say, how old are 
you? They come up with some life expectancy. They make some 
assumptions about returns, et cetera, and they can tell you how 
much you need to save to reach those goals.
    The problem is, most of those assumptions are extremely 
flimsy, and to illustrate that point, imagine we are back in 
1999 and asking your question, Senator, and someone who put 
their money in stocks and a 401(k) plan, and let us say someone 
else, not as financially literate, bought gold. The person who 
bought gold made 700 percent. The person who bought stocks made 
zero. Now, I am not projecting that into the future. I just put 
that point out there to illustrate that it is all in the 
assumptions, and until we have stable money and better Fed 
policy, I do not see how any investor can answer the question 
intelligently because we do not know what the dollars are going 
to be worth.
    Senator Tester. Good point. I just want to follow up just a 
little bit. You said that the models are out there, and this 
can apply to all of you because you know I am a farmer in my 
real life and I am not sure I would know how to determine how 
much money I am going to need when I retire, to be honest with 
you. Living in Big Sandy, Montana, is a whole heck of a lot 
different than living in Washington, D.C. And the costs it 
would cost me to live there and Washington, D.C., are 
different.
    Are there actually models out there that if somebody was 
just out of college, and assuming they are going to live in the 
same area--which is a tough assumption right out of the shoot--
that could tell you what is going to happen, because there are 
so many varying factors out there. There is inflation. There is 
energy prices. I mean, my goodness, there is just variance 
after variance and how can you predict somebody who is 21-years 
old, what they are going to need when they are 45 years down 
the road? Do you have any insight into that?
    Mr. Rickards. The short answer is you cannot predict 
exactly, Senator, but you can engage in portfolio construction, 
pick assets, and diversify the assets in such a way that over 
long periods of time, they tend to track or perform well 
relative to various outcomes, some stocks, some bonds, some 
precious metals, some hard assets, et cetera. So you do not 
know the answer, but you try to prepare for all weather, so to 
speak.
    Senator Tester. Got you. All right. Would anybody else like 
to--Dr. VanDerhei.
    Mr. VanDerhei. Senator, I certainly agree with that. The 
important point, though, is you do not want to bury the 
individual in so much uncertainty that they are frozen from 
doing anything in the first place.
    Senator Tester. Right.
    Mr. VanDerhei. You want to get them into a situation where 
they start contributing, and hopefully as they get further down 
the process, get a much more accurate assessment of where they 
need to be.
    Senator Tester. OK.
    Mr. Calabrese. I would just say that what may be most 
important is if we could get this sort of automatic savings 
system, you know, if everybody had an automatic enrollment into 
a payroll deducted saving plan with the right defaults, because 
if your employer and the Government are saying--because they 
are defaulting you, they are saying, now, here is what you 
should be doing. So even if you are 23, they are starting you 
at 6 percent of your pay and escalating you, say, to 10 
percent, well, that is giving you an idea that, yes, that is 
what the experts think you should be doing. And you may not 
know whether your income is going to double or triple over the 
next 30 or 40 years. You may not know where you are going to 
end up living. But if you can hit that benchmark which you 
ought to be defaulted into, you will be in pretty good shape.
    The other thing which I should have mentioned earlier is 
another good starting point would be to reinstate the annual 
statement from Social Security, because we used to at least 
see, you know, get the thing in the mail each year, which we 
are not. And what would be a nice thing is if they could begin 
sending that either in addition or alternatively by email, they 
could include links to things like the Choose to Save 
retirement calculator that EBRI sponsors, because then you 
could actually connect people directly to these engines where 
they can begin doing these calculations.
    Senator Tester. Very good. Thank you.
    Senator Vitter.
    Senator Vitter. Thank you, Mr. Chairman, and thank you all 
again.
    Is it clear that this problem is worsening long term when 
you factor out the recent recession and the current really sort 
economy? I assume that is an immediate factor. But to talk 
about long-term trends, you sort of have to back that out. So 
is it clear once you back that out that the problem is getting 
worse?
    Mr. VanDerhei. If I could, we did our first national 
assessment back in 2003 and updated it in 2010 and found 
actually a significant reduction in the percentage of 
households who were at risk, even though we had just gone 
through the 2008-2009 financial market crisis. The number one 
reason for that, and I realize this is something one needs to 
think about for a second, is that what group is most at risk? 
It is the low income.
    There was something very, very valuable that happened 
between 2003 and 2010 and that was the Pension Protection Act 
in 2006. What it did was make automatic enrollment types of 
401(k) plans much more popular for plan sponsors to adopt. And 
if you go back and look at the participation rates for the low-
income individuals, again, the ones most at risk, you find 
situations where they virtually double, from being in the 40 
percent range to the high-80 or low-90 percent range. What that 
one factor alone has done in projecting out future retirement 
income for the low-income has been absolutely phenomenal.
    So if you go back pre-PPA, pre-2006, you have seen a marked 
improvement because of what the employers have done to help the 
low-income. But I will agree, if you go back and look just at 
the 2008 and 2009 years by themselves, certainly, the financial 
market and the real estate market crises have anywhere from 3 
to 14 percentage points increased those that are considered to 
be at risk.
    Going forward is actually dependent almost more than 
anything else on what happens with respect to uninsured health 
care in retirement. Nursing home costs, as I am sure you are 
aware, are a very, very large exposure. Families that get to 
retirement age with what seems to be an appropriate amount of 
financial resources, after one or two spells of expanded times 
in an expensive nursing home can very easily chew through those 
amounts.
    Senator Vitter. Quickly, because I do not want to use up 
all my time, do you all have any other responses to my first 
question?
    Mr. Calabrese. Yes. Just to back up what Jack said is that 
the biggest change in participation in an employer plan over 
the past 30 years has simply been--you can see it almost 
percent by percent, is the shift from defined benefit to 
defined contribution, right, from traditional pension to 
401(k), because what has happened is that although the overall 
participation rate at about 50 percent has been relatively 
level, the participation rate among the lowest third by income 
has fallen by about ten to 12 percentage points, and that is 
because when employers had traditional plans, they 
automatically put everybody into it and saved on their behalf. 
Now, you need to choose to save, and so the lower-wage workers 
are not doing that as much and that is really hurting the 
overall picture.
    Senator Vitter. OK.
    Mr. Rickards. And I would say Dr. VanDerhei's projections 
are certainly correct about the benefits of automatic 
enrollment. It increased participation, increased savings. I 
take far less comfort than he from how that will play out, 
because it all depends on long-term growth assumptions. Your 
savings do not do you any good if you are not going to get 
returns, and in sort of a hostile business environment, there 
is no reason to expect the future returns will match the past, 
and I think the 12-year stretch in the stock market from 1999 
to 2011 bears that out.
    Senator Vitter. OK. That sort of goes to my next question 
for Mr. Calabrese and Dr. VanDerhei. Have you done any 
calculation or do you have any comments about the impact of the 
Fed's zero interest rate policy, which is unprecedented, 
certainly, in terms of its longevity, on this problem?
    Mr. VanDerhei. Actually, right after we did our 2010 study, 
the Wall Street Journal called me up and asked me almost 
specifically the same question. Our baseline rate of return 
numbers were relatively high in a nominal sense compared to 
what you have today, 8.9 percent for equities and 6.3 percent 
for fixed income on a stochastic basis. The Wall Street Journal 
asked if we could lower that to a nominal 6 percent for 
equities and 2.4 percent for fixed income.
    At that time, our at-risk percentages were 47 percent. 
Putting in this new low interest rate scenario that they wanted 
modeled increased the percentage of early Boomers from 47 
percent all the way up to a situation where 59 percent of them 
would be at risk. So there would be a very large increase in 
those households that we would consider to be at risk because 
of that particular policy.
    Senator Vitter. So that, you could say from that rough 
calculation, has roughly grown the problem 25 percent?
    Mr. VanDerhei. Correct.
    Senator Vitter. OK. Mr. Calabrese, do you have any comment?
    Mr. Calabrese. Yes. I have no independent data on that. I 
would just note that, of course, a low interest rate policy 
would have a very differential effect depending on whether you 
are already retired or saving, particularly the older workers 
shifting assets into fixed income, because folks who are 
already retired, of course, have benefited from a bull market 
in bonds. But those who are shifting assets and new saving into 
fixed income, of course, are feeling that pinch.
    Senator Vitter. OK. And probably the final question, this 
help, this improvement in terms of the changes that were made 
that encouraged a lot more automatic enrollment, what does that 
suggest about a logical next step to reasonably encourage even 
more automatic enrollment or similar gains in participation? 
What policy would reasonably be the next step?
    Mr. VanDerhei. It may be that you are in a period now where 
employers are still sorting out from a cost-benefit standpoint 
whether or not they want to go with automatic enrollment. The 
one thing you have to remember is that although the good news 
is you increase participation rates, the downside for employers 
is if you have a matching contribution, that means it is going 
to cost them more. And I think there are a lot of employers who 
are still waiting to see, perhaps looking at their competitors, 
perhaps looking at what these participants actually end up 
doing, whether they think automatic enrollment is correct for 
them from a business standpoint.
    Mr. Rickards. Senator, I would add, when you say automatic 
enrollment, my question would be, enrollment into what? I 
applaud automatic enrollment and the incentive to save, but if 
you are just going--and plan sponsors are extremely reluctant 
to offer any alternatives or any investments other than 
traditional stock/bond portfolios, and if those are going to 
be--if we are in the middle of another stock bubble, and my 
view is we are, that is another disappointment for investors. 
So unless there are some other things they can invest in, 
prudently managed, but precious metals, pools of hedge funds, 
things that are a little nontraditional, then they could just 
be setting up for another fall. All that savings and all that 
wealth could be wiped out in a stock market crash.
    Senator Vitter. Thank you.
    Senator Tester. Thank you, Senator Vitter.
    Senator Akaka.

              STATEMENT OF SENATOR DANIEL K. AKAKA

    Senator Akaka. Thank you very much, Mr. Chairman, for 
holding this hearing. I would like to say aloha and welcome our 
witnesses to the hearing today.
    As defined benefit pensions become less common and many 
families have little retirement savings, I am very concerned 
that many senior citizens will face financial insecurity as 
they age.
    The current retirement system, signed by President Reagan 
in 1986, has served as a model for modern pensions, combining a 
small defined benefit, a 401(k)-style plan with matching 
contributions, and Social Security. Since that time, private 
sector pension participation has fallen dramatically. In my 
view, Congress must focus on addressing the nationwide 
retirement savings gap, shoring up systems that provide some 
guaranteed benefit to workers, and promoting individual 
savings.
    As a longtime advocate for enhancing our Nation's financial 
literacy, I believe it is critical to ensure that people have 
the knowledge and support to effectively save for retirement. 
We must work with employers and the financial industry to 
educate employees and also to make it easier for the average 
American to save for his or her retirement.
    This question is for Mr. Calabrese and Dr. VanDerhei. It is 
often a challenge to encourage employee participation in any 
retirement savings plan, especially for younger and lower-
income employees. In 2009, Congress passed legislation to 
automatically enroll Federal employees in the Thrift Savings 
Plan unless they opt out. You both mentioned automatic 
enrollment in your testimony. I would like to hear more about 
how automatic enrollment helps individuals save for retirement.
    Mr. Calabrese. OK. Well----
    Senator Akaka. Mr. Calabrese.
    Mr. Calabrese. Right. I will start, and I know that Jack 
will be able to give an update on the data since they run a 
database of 401(k) plans that keeps track. But the most recent 
data I had seen was that of the roughly 45 percent of 401(k) 
plans that use automatic enrollment, they were seeing an 
improvement of about 30 percentage points in the overall 
participation rate. And of course when you are picking up 
people, you are picking up disproportionately the middle to 
lower range because the affluent have a very high participation 
rate to begin with. So it is very, very helpful.
    There is a bit of a controversy, though, about the initial 
contribution rate, where it should be set, because about--the 
Wall Street Journal, for example, I think about a year ago had 
basically criticized the fact that the initial contribution 
rates for the majority of plans were set at 3 percent, and this 
was encouraged, in effect, by the Pension Protection Act, which 
in allowing this while giving a safe harbor cited 2 to 4 
percent as the range. And so, really, we would agree with the 
Journal that 6 percent as an initial default contribution is 
much better, because actually, at 3 percent, a majority of 
workers, even if they are consistently saving, would not reach 
even 80 percent of their target for retirement income adequacy.
    Senator Akaka. Dr. VanDerhei.
    Mr. VanDerhei. Well, I certainly agree with most of that. 
We have seen a tremendous increase in the overall projected 
accumulations for 401(k) balances when they move from the old 
style voluntary system to the automatic enrollment.
    I think the other question one wants to focus on is 
basically if you do start them at those relatively low default 
contribution rates, is there another procedure, such as 
automatic escalation, that is going to be valuable in getting 
people back to where they need to be long-term. There is, 
unfortunately, as mentioned, the upside that the participation 
rates especially among the low-income and the young increase 
substantially, but because of inertia, which works to the 
benefit of many employees--because once you put somebody in 
they are very unlikely to opt out--once you put somebody in at 
a particular contribution rate, they are also very unlikely to 
move from that on their own. And you have had this anchoring 
effect, and, in fact, many individuals on the upper income side 
would have been contributing at a higher rate had they 
voluntarily made that election as opposed to the automatic 
election.
    But in terms of what is going on in the private sector 
among large sponsors, we now find 58 percent of large 401(k) 
sponsors have now moved to automatic enrollment and the other 
nice advantage about automatic enrollment in many cases is you 
get around the problem of allowing participants to necessarily 
direct their own investments. You find a substantial proportion 
of young individuals who will not put anything in equities. You 
find a substantial portion of the older people who have very, 
very high equity allocations. And you find still today, even 
after Enron, some people who will basically have almost all of 
their portfolios in company stock.
    The reason automatic enrollment has worked so well, in 
addition to defaulting them in and defaulting their 
contribution, you also in most cases default them into usually 
a target date fund which is professionally managed and will 
have an age-appropriate asset allocation, and as the markets 
fluctuate, put them back to where at least professionals think 
the correct asset allocation should be.
    Senator Akaka. Thank you very much for your responses. 
Thank you, Mr. Chairman.
    Senator Akaka. Thank you, Senator Akaka.
    This is a question for Mr. Calabrese. Your testimony 
highlights what the challenges are facing employees that work 
for small businesses. They may not have the staff, the 
resources, the time to craft, manage retirement plans for their 
workers like the larger companies do. Montana being a small 
business State, 75 percent of our workers work for companies 
that have less than 100 employees and many of those need to 
take retirement into their own hands.
    The question is for you, and the other two can respond if 
they would like. How are small business employees and 
proprietors saving for retirement, or are they just simply not 
doing it?
    Mr. Calabrese. Yes. So, currently, the GAO had identified 
the categories of workers that are participating at very low 
rates, and in addition to the very young, very low income is 
people who work at small business. So a majority of small firms 
are not sponsoring these qualified retirement plans, and that 
is the reason that, you know, we have been suggesting that the 
automatic IRA concept is a very good one, because particular if 
you--you could exempt businesses that have fewer than, say, 
five or ten employees, but certainly anybody bigger than that, 
almost--more than 90 percent are using payroll services, for 
example. And we found that there are empty fields. They do 
paycheck deposit automatically, and it is just as easy to 
automate at marginal cost a saving into an automatic IRA 
without having to go jump through any of the regulatory hoops. 
You do the sponsor, an actual qualified plan.
    Senator Tester. So, and maybe I do not understand the 
automatic enrollment. I assume what you just said was automatic 
enrollment would happen for businesses over five or ten 
employees. The question I have, I guess, revolves around if 
there is extra money laying around, it usually goes to health 
care in a business, to try to provide them with that benefit. 
Would this have--look, we have got two problems here, and they 
may be like this. The automatic enrollment and the opportunity 
for increasing savings from retirement, all three of you said 
will work, assuming that the investment is put in the right 
spot. I guess the question is, has anybody done any analysis to 
see if this would have a negative or positive impact on a job 
market with it being another benefit? I hate to play the 
devil's advocate, but----
    Mr. Calabrese. Right. Right. Oh, sure. Well, it would 
depend what you require. The automatic IRA concept actually 
does not require employers to make any contribution.
    Senator Tester. OK.
    Mr. Calabrese. So there would really be no cost to them, 
and, in fact, the bipartisan bills that have been put in 
typically provide a small tax credit even to cover the payroll 
accounting expense----
    Senator Tester. Got you.
    Mr. Calabrese.----to the extent that there is one. And, in 
fact, some proponents of the automatic IRA would preclude 
employer contributions, although we think that employers should 
at least have the option to contribute.
    Senator Tester. Absolutely. OK.
    I guess if you were going to--and you may repeat yourself 
on this, and that is fine--give me the top one or three things 
that you would do if you were sitting in my chair to help solve 
this problem, what would they be, and we will just go down the 
line. You first, Mr. Calabrese.
    Mr. Calabrese. OK. Well, the first, and this may not, 
unfortunately, not be squarely under your jurisdiction, is this 
notion of a universal automatic payroll deposit saving program 
that is accessible to every American worker. So, in other 
words, if your employer--you could exempt employers who are 
eligible, actually eligible to participate. So, for example, 
they have worked the year at a firm that sponsors a qualified 
plan, like a 401(k). But everyone else should be able to get 
into one of these portable career accounts, the automatic IRA 
idea.
    Second, I mentioned children's savings accounts. I think if 
we start--and that would speak toward the literacy issue, as 
well. New America had a proposal which has been introduced as 
bipartisan legislation over the years, the ASPIRE Act for 
children's savings accounts. It starts them off with a $500 
contribution. Ideally, you would have some tax incentives for 
families to contribute with the idea that that could grow by 
age 18 to really help pay for at least a State-level college 
education or to invest in a first home or to seed retirement 
saving.
    And then the third thing is I think we need more 
initiatives to help bank the unbanked. So there was the 
proposal--there have actually been trials that began out in San 
Francisco, Bank on USA, for example, which the Treasury 
Department--the Obama administration had proposed to fund for a 
larger demonstration project. I do not believe that has 
happened yet. But that sort of thing is good to get people into 
the system.
    Senator Tester. OK. Dr. VanDerhei.
    Mr. VanDerhei. Well, I will give you three suggestions in 
no particular order. The first two deal with automatic 
enrollment, and almost by historical accident, we have ended up 
where we are today with respect to default contribution rates 
with automatic escalation being around 3 percent. If there was 
something the Government could do to help employers understand 
that going above 3 percent not only is more likely to help 
employees reach their goals, but is going to be sort of a safe 
harbor in terms of plan design, I think that would be ideal.
    Another thing is with respect to automatic escalation. We 
did not really get a chance to go into that, but if you start 
people at a relatively low three or 6 percent and then put them 
in a program where automatically their contribution rates go up 
1 percent per year until a specific level unless they opt out. 
Unfortunately, under today's safe harbors, the maximum you can 
allow that to go to automatically is 10 percent. I would dare 
say most financial professionals would say 10 percent from the 
employees plus perhaps a 3-percent match from the employer 
still is not going to be sufficient, especially in the low rate 
of return environment. And if you could allow those automatic 
escalation programs to continue beyond 10 percent, I think that 
would be great.
    Third, risk management techniques at retirement. Again, I 
think so many individuals just use sort of a 50-50 chance of I 
will be OK if I have X dollars when I hit age 65. You have got 
longevity risk and you have got catastrophic health care risk 
that needs to be dealt with. There are many, many reasons, some 
legitimate and some perhaps not, that employers do not want to 
become involved in helping employees with the longevity risk. 
If you could have situations in which, for example, annuities 
or longevity insurance could be provided through the plan and 
employers would feel safe doing that, I think you would reach a 
situation where people have a much better cap on what they 
would need in terms of a prolonged lifespan.
    Senator Tester. OK. Mr. Rickards.
    Mr. Rickards. Senator, I have three suggestions. The first, 
simply call upon the Fed to give us sound money, and the 
importance of that is money is how we count and make all these 
other decisions. We have heard talk today about target date 
funds, portfolio diversification, et cetera, and these all 
involve price signals and those price signals go into these 
complicated calculations. But without sound money, the price 
signal, the input and the output is all meaningless. So I would 
start there.
    The second is a broader set of investment options. I 
certainly applaud automatic enrollment and things we have heard 
about today, but we need to get beyond traditional stocks and 
bonds because they are vulnerable to these bubble environments, 
and the way you prevent that is with some other hedges, such as 
precious metals, alternatives, real estate, perhaps.
    And the third, I agree with my co-panelists, financial 
literacy is critical. I have enormous confidence in the ability 
of the American people to make smart decisions about their own 
money, but financial expertise is no different than any other 
expertise. You need some training and some familiarity with it.
    Senator Tester. Well, I want to thank you. Actually, we are 
going into another area that is something that I, quite 
frankly, think about personally, and that is the impact on my 
inability to save enough money is going to impact me working 
longer, which is going to impact the job market, which is going 
to--when I sell off what investments I have, what impact is 
that going to have on the investment markets, and the list goes 
on and on and on. And if I am in that boat, there are probably 
a lot of other folks that are in that boat, too.
    I just want to thank you all for your testimony today. I 
very much appreciate you coming in and giving us your insights 
and your perspectives about retirement savings and security 
issues facing this country. I think the picture is clear from 
each one of you. It is concerning in each different area, and 
unquestionably, I think, much needs to be done to communicate 
facts and data that you folks have provided here today, along 
to those preparing for retirement, and I hope this hearing will 
raise an awareness of this challenge and facilitate education 
to improve this Nation's retirement preparedness, confidence, 
and security. There are bills out there that I am hopeful will 
surface to the top and get written up that we can flesh out and 
really address some of these issues.
    And so I look forward to working with you all in the future 
to discuss some of these issues and hopefully do some things 
that will be good to help move the country forward as far as it 
goes through retirement security.
    The hearing record will remain open for 7 days for any 
additional comments and for any questions that might be 
submitted for the record.
    Once again, thank you all for being here. This hearing is 
adjourned.
    [Whereupon, at 3:34 p.m., the hearing was adjourned.]
    [Prepared statements and additional material supplied for 
the record follow:]


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