[Senate Hearing 117-109]
[From the U.S. Government Publishing Office]
S. Hrg. 117-109
BUILDING WEALTH AND FOSTERING
INDEPENDENCE: CREATING
OPPORTUNITIES TO SAVE
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HEARING
BEFORE THE
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
__________
JULY 15, 2021
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Serial No. 117-05
Printed for the use of the Special Committee on Aging
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
45-315 PDF WASHINGTON : 2021
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SPECIAL COMMITTEE ON AGING
ROBERT P. CASEY, JR., Pennsylvania, Chairman
KIRSTEN E. GILLIBRAND, New York TIM SCOTT, South Carolina
RICHARD BLUMENTHAL, Connecticut SUSAN M. COLLINS, Maine
ELIZABETH WARREN, Massachusetts RICHARD BURR, North Carolina
JACKY ROSEN, Nevada MARCO RUBIO, Florida
MARK KELLY, Arizona MIKE BRAUN, Indiana
RAPHAEL WARNOCK, Georgia RICK SCOTT, Florida
MIKE LEE, Utah
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Stacy Sanders, Majority Staff Director
Neri Martinez, Minority Staff Director
C O N T E N T S
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Page
Opening Statement of Senator Robert P. Casey, Jr., Chairman...... 1
Opening Statement of Senator Tim Scott, Ranking Member........... 3
PANEL OF WITNESSES
Thomas Foley, Executive Director, National Disability Institute,
Washington, D.C................................................ 6
Rodney Brooks, Retirement Columnist and Author, Silver Spring,
Maryland....................................................... 7
Josie Badger, Ph.D., Campaign Manager, #IWantToWork, New Castle,
Pennsylvania................................................... 9
John Iacofano, Owner, Iacofano's Catering, Mount Pleasant, South
Carolina....................................................... 11
APPENDIX
Prepared Witness Statements
Thomas Foley, Executive Director, National Disability Institute,
Washington, D.C................................................ 29
Rodney Brooks, Retirement Columnist and Author, Silver Spring,
Maryland....................................................... 32
Josie Badger, Ph.D., Campaign Manager, #IWantToWork, New Castle,
Pennsylvania................................................... 36
John Iacofano, Owner, Iacofano's Catering, Mount Pleasant, South
Carolina....................................................... 40
BUILDING WEALTH AND FOSTERING
INDEPENDENCE: CREATING
OPPORTUNITIES TO SAVE
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THURSDAY, JULY 15, 2021
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The Committee met, pursuant to notice, at 9:37 a.m., via
Webex and in Room SD-562, Dirksen Senate Office Building, Hon.
Robert P. Casey, Jr., Chairman of the Committee, presiding.
Present: Senators Casey, Blumenthal, Kelly, Warnock, Tim
Scott, Braun, Rick Scott, and Lee
OPENING STATEMENT OF SENATOR ROBERT P. CASEY, JR., CHAIRMAN
The Chairman. The Senate Special Committee on Aging will
come to order. I would like to welcome everyone to the Aging
Committee's first hybrid hearing of this Congress, with members
having the option to attend in person or online. Welcome,
everyone.
This hearing will focus on the challenges individuals face
when working to achieve long-term financial security and save
for a stable retirement. All Americans worry about their
economic future, especially as we grow older. For people with
disabilities, finances, savings, and income are especially
worrisome issues. According to the Bureau of Labor Statistics,
in 2020, across all age groups, people with disabilities were
much less likely to be employed than those with no
disabilities. The same report found that across all educational
attainment groups, unemployment rates for people with a
disability were higher than for those without a disability.
Since people with disabilities are less likely to be
employed and much more likely to be underemployed, their
lifetime earnings are far less than the average citizen. Family
members are often forced to quit their jobs to help care for
other family members, family income has often been
significantly limited.
For these families, Congress has removed some of the
barriers to saving and to planning for the future. The
bipartisan Stephen E. Beck, Achieving a Better Life Experience
Act, or as we know it by the acronym the ABLE Act, which
Senator Burr and I led in the Senate when it passed in 2014.
This act makes it possible for people with disabilities to save
for the future. With an ABLE account, people with disabilities
can save for the future without losing their Federal disability
benefits such as Supplemental Security Income or Medicaid. With
the opening of ABLE accounts in 43 states, over 91,000 people
have been able to save over $759 million, an average of over
$8,300 per account.
These essential assets allow people to open their own
businesses, save for retirement, purchase the technology they
need, and so much more. That includes, in my home State of
Pennsylvania, over 5,200 people who have used ABLE accounts to
save over $57 million so far.
One such Pennsylvanian is a member of our witness panel
today, Dr. Badger, who will tell us how an ABLE account helped
her buy her first home.
ABLE has made building wealth a real possibility for
millions of Americans but our work on this issue is not done.
ABLE accounts are not available to all people with
disabilities. To open an account, a person has to acquire their
disability prior to their 26th birthday. This needs to change.
Many people acquire their disability after age 26, including
over 1 million veterans.
That is why Senator Jerry Moran of Kansas and I, along with
10 additional colleagues--four Republicans, six Democrats--have
introduced Senate Bill 331, the bipartisan ABLE Age Adjustment
Act. The bipartisan House version, which is H.R. 1219, has been
introduced by Representatives Tony Cardenas and Judy Chu of
California and Cathy McMorris Rodgers of the State of
Washington. They have been joined by 39 Democrats and 20
Republicans to help pass this important legislation.
The ABLE Age Adjustment Act will provide 6 million
additional Americans with disabilities with the opportunity to
open an ABLE account. The ABLE Age Adjustment Act legislation
is an important step toward a more stable economic future for
people with disabilities. There remain other challenges which
must be addressed. As we will hear today, barriers to economic
also plague many communities of color. Higher levels of poverty
and unemployment have made it more difficult to save long-term
for many people from African American, Latinix, and other
diverse communities. This is a disturbing set of numbers I am
about to read.
A 2020 report from the Federal Reserve, and that is
obviously very recent, estimated that white families had eight
times--eight times--the wealth of the typical Black family and
five times the wealth of the typical Hispanic family. No one
can be satisfied with those numbers. The same report has also
found that the asset-based net worth of white households was
more than four times the level of Black households. As a
Nation, we have only begun to address the barriers to economic
security for people with disabilities and communities of color
as they age.
I look forward to hearing from our witnesses today about
these important issues and the progress we hope to be able to
make.
Before we begin, I want to remind Committee members and
witnesses to please keep remarks and questions to five minutes.
Following opening remarks, Senators will ask questions based on
seniority whether joining in person or by camera virtually.
Ranking Member Scott, I am pleased to turn it over to you
for your opening remarks. It is great to see you in person.
OPENING STATEMENT OF SENATOR TIM SCOTT, RANKING MEMBER
Senator Tim Scott. Thank you, Chairman Casey.
It is good to see you in person, as well. This is such an
important Committee and we do good work under your leadership
and I appreciate the way that you have handled the
responsibilities of chairing this Committee and keeping our
focus not on each other or each side but on the American people
and specifically on seniors and folks with disabilities. It is
really important for us to recognize that many of us are
blessed. We are blessed to serve in the U.S. Senate on behalf
of our states and on behalf of people who need help.
One of the things I think about, Chairman Casey, as I
ponder this conversation around retirement security is how
fortunate we are to be in a position where we have retirement
accounts connected to what we do. Many times folks who have 100
employees or fewer do not have access to a retirement account.
I know that is true here in Washington, DC. as well as it is
true at home in South Carolina.
Growing up in poverty has another impact on that wealth gap
that you talked about, the difference between African
Americans, Hispanic and white folks, the amount of net worth
they have typically can manifest in the equity in a home. If
you do not have access to home ownership because of challenges,
then you are going to see that wealth gap only increase. As
that wealth gap increases, we will see that have an impact on
how comfortable you are in retirement.
There are many pieces to the life puzzle of retirement that
we will address today and I am thankful that we have an
opportunity to do so. I am also thankful that, as a kid growing
up in poverty, I had the chance of meeting a small business
owner who was my mentor, who started teaching me about
financial literacy at 15, 16, and 17 years old. That was a
blessing that too many Americans do not have.
Learning those lessons early in life allows for your
retirement years to look very differently. Far too many
Americans living paycheck to paycheck, including vulnerable
populations facing poverty, and some with disabilities,
retirement seems out of reach no matter how old you are.
Too often, you see good people who have worked all their
lives having to continue to work well into what we would
consider your traditional retirement years.
For others, there are obstacles such as keeping your
retirement plan when you are switching jobs. Getting access to
a retirement plan when working for small businesses, as I just
mentioned, is harder to do. In South Carolina, approximately
400,000 full-time employees do not have access to an employer-
sponsored retirement plan. Two hundred thousand-plus South
Carolinians who are working part-time do not have access to a
retirement plan.
African Americans disproportionately have less access than
other folks. Employers are a critical major piece of this
retirement puzzle. One of the ways that we can help this is to
make sure that employers have an easier access to establishing
retirement plans.
As a former small business owner myself, I know the passion
that we have for our extended families that we see as our
employees. We see our employees as a part of our extended
families. When we have an easier path to establishing and
setting up retirement accounts for our employees, we look
forward to that opportunity. We lean into that opportunity. It
does solve a lot of problems. When you are making between
$30,000 and $50,000 a year you are 12 times more likely not to
be able to save for your retirement unless you work at a place
where they have a retirement system there. Despite wanting to,
small employers find it difficult and often impossible to
provide retirement plans because of administrative burdens,
startup costs, fees, and liabilities.
There is good news, though. The SECURE Act signed into law
in December 2019 makes it easier for small business owners to
set up retirement plans that are less expensive and frankly,
much easier to administer. Today we will have the good fortune
of hearing from an entrepreneur, a South Carolinian, John
Iacofano, who is launching his company's first retirement plan
today. Wonderful. I am excited to hear from John.
This new retirement plan is also the result of work by Matt
Watson, a local advisory in Charleston who is helping small
businesses across the State launch their own plans.
We have wonderful examples throughout the great State of
South Carolina of these folks taking advantage of a simpler,
more effective way of providing for retirement security for
their employees. Bitty and Beau's Coffee in Charleston is one
of those great examples that comes to mind. This coffee shop
specifically employs folks with disabilities, helping them
achieve financial independence.
Despite the struggles that so many Americans face, there is
good news. Two-thirds of Americans living in retirement over
the age of 65 over the past 5 years say that retirement is
becoming a little more comfortable. In 2019, four out of five
Americans aged 65 and older reported having enough money to
live comfortably. This all means the financial well-being of
seniors has improved substantially in recent decades and it
gets better every single year. There is still more work to be
done, and that is one of the reasons why we are working on what
I would call SECURE Act 2.0, a bill designed to help us solve
some of these problems and overcome some of the challenges.
Thank you, Mr. Chairman.
The Chairman. Thank you, Ranking Member Scott.
Now we will turn to our witnesses. Before I do that, I want
to acknowledge the presence of Senator Blumenthal, who is here
with us. We will have Senators coming in and out today. As you
know, Thursday morning is a busy committee morning, so we will
have Senators coming in, sometimes coming in and having to
leave and come back for questions. We will try to fit everybody
in as they are available.
I want to turn to our first witness, Mr. Tom Foley. Mr.
Foley is the Executive Director of the National Disability
Institute. He has more than 30 years experience in the
disability community. He has dedicated his career to working to
create pathways to employment and financial security for people
with disabilities. We welcome him.
Our second witness is Mr. Rodney Brooks, a retirement
columnist and author. He brings decades of experience writing
on retirement, personal finance, and business issues for
publications ranging from U.S. News and World Report, the
Washington Post, and the Philadelphia Inquirer. He has
committed his career to helping people prepare for retirement
and save for the future. We welcome Mr. Brooks.
Third, our third witness is, as I mentioned earlier in my
opening statement, Dr. Josie Badger from New Castle,
Pennsylvania. That is Lawrence County on the Ohio border in
Western Pennsylvania, north of Pittsburgh. Dr. Badger is the
founder of J. Badger Consulting, Incorporated where she
provides youth development and disability consulting services
for various organizations.
She is the campaign manager of the United Way of
Southwestern Pennsylvania's #IWantToWork campaign, where she
works to improve the employment of people with disabilities.
She is also a person who knows firsthand the challenges people
with disabilities face when trying to save for the long term.
Due to the Federal asset limit for many years, Dr. Badger
was unable to save more than $2,000 without risking the loss of
her Federal benefits. That changed with the passage of the ABLE
Act, which allowed her to finally save for her future.
For our fourth witness, I will turn to Senator Scott, our
Ranking Member, to introduce Mr. Iacofano.
Senator Tim Scott. Thank you, Chairman Casey.
It is my pleasure to introduce today John Iacofano. John is
the owner of Iacofano's Catering in Mount Pleasant, South
Carolina. He is an entrepreneur, a leader, and a successful
employer. I am proud of his work and the company he has built
in my home State.
With only $90 to his name and money coming in from a
painting job, John opened his first location in February, 2002.
Today, John has 85 employees, six locations across the country
including Charleston, Denver, Cleveland and Philadelphia.
Iacofano's provides catering and food services to corporate
events, weddings, in-flight service, senior living facilities,
and meal service non-profits such as Meals on Wheels, which
proved so critically important during the peak of COVID-19.
John's testimony today is about his efforts and success at
offering a brand new retirement savings plan to his employees
because of the passage of the SECURE Act.
I do not want to steal his thunder about what he is doing
on this, his launch date for the retirement plan, but I look
forward to hearing his comments.
John, we truly appreciate your entrepreneurship and hard
work offering new opportunities to your employees. Thank you
for taking the time to be with us today.
The Chairman. Thanks, Ranking Member Scott.
Now we will turn to our witnesses for their statements. We
will begin with Mr. Foley. Mr. Foley, you may begin.
STATEMENT OF THOMAS FOLEY, EXECUTIVE DIRECTOR, NATIONAL
DISABILITY INSTITUTE, WASHINGTON, D.C.
Mr. Foley. Good morning, Chairman Casey, Ranking Member
Scott, and other distinguished members of the Committee. Thank
you for the opportunity to be here today.
My name is Thomas Foley. I am the Executive Director of the
National Disability Institute. In addition to that, I am
someone who is blind, who has spent time on SSI, spent time on
SSDI but has managed, over time, to build an economic future
for myself and my family.
As was mentioned earlier, there are far too many barriers
to economic advancement for people with disabilities. I still
vividly remember as a freshman in college, learning about the
$2,000 asset limit because I was on SSI. I thought the person
who told me that was actually joking. I wanted what everyone
else did. I wanted to buy a home. I wanted a financial future,
a job that led to a career, a family. I wanted the American
dream. I was not sure how I was going to accomplish the
American dream if I was not allowed to save money.
That $2,000 asset limit has not changed since I was a
freshman in college and that was a while ago. Simply put, asset
limits and income limits discourage savings, work and hope for
people with disabilities.
Many other factors complicate building an economic future.
As was mentioned, people with disabilities have a difficult
time finding stable full-time employment. Workforce
participation rates in June, according to ODA the workforce
participation rate for people with disabilities was 21 percent
versus 67 percent for people without disabilities. It is nearly
impossible to save for a long--term future without stable
competitive employment.
In addition to that, recent research has shown that people
with disabilities face additional costs that people without
disabilities do not face. They average $17,000 a year. These
extra costs have to be met somehow, as well.
I was really lucky in high school as well, as was Senator
Scott, to take a financial education course. I learned about
saving money, how to avoid debt, how credit cards worked, why
it was so important to get a bank account. Recent data from the
FDIC reports that people with disabilities are three times more
likely to be unbanked, 16 percent versus 4.5 percent, than the
rest of the population. It is difficult to build a financial
future without the basic building blocks of a bank account or
financial education and financial coaching for people with
disabilities.
Underlying much of this is an unspoken but palpable belief,
sometimes by teachers, sometimes by employers, unfortunately
sometimes by friends and family, that folks with disabilities
cannot work and cannot build a financial future. Sometimes
people with disabilities internalize this.
Fortunately, removal of policy barriers can change this
narrative. One such policy action was the ABLE Act in 2014, as
mentioned earlier. We have seen firsthand how this has changed
people's lives. People buy homes, they go back to school, they
start small businesses.
Particularly for folks with disabilities, who might have
episodic or contractual work, we have seen that ABLE savings
that, on average, that $8,000 per account allows people to
navigate periods of unemployment, remain financially resilient
through economic downturns and ultimately, improve their short-
and long-term financial outcomes.
Unfortunately, as currently written, the ABLE account
leaves out lots of people from being to access this tool and
realize these benefits. Therefore, we strongly advocate for the
passage of the ABLE Age Adjustment Act. Passing this will allow
people with disabilities, with disability onset up to age 46,
to open new accounts and expand the universe of ABLE accounts.
We believe it will increase utilization of accounts and there
are up to 6 million people who could benefit.
In addition to that, we believe it strengthens the ABLE
financial perspective and will create innovation within the
ABLE space. In addition, it will allow older Americans who have
become disabled by chronic illness, by accident, or by military
service to benefit from this program as well.
Members of this Committee, I started this testimony by
talking about my American dream. I have achieved that. I bought
the house, I have a solid retirement account. I put two-and-a-
half kids through college. I am not particularly special.
People do not need to change, systems do.
With your help, today, we can begin to change those systems
and increase financial security and economic outcomes for
people with disabilities.
Thank you for the opportunity.
The Chairman. Thank you, Mr. Foley, for your statement.
Now we will turn to Mr. Brooks. Mr. Brooks, you may begin.
STATEMENT OF RODNEY BROOKS, RETIREMENT COLUMNIST AND AUTHOR,
SILVER SPRING, MARYLAND
Mr. Brooks. Good morning, Chairman Casey, Ranking Member
Scott and members of the Committee.
My name is Rodney Brooks. I am a personal finance author
and business journalist. I have written about retirement issues
and wealth disparities for publications like U.S. News & World
Report, the Washington Post, USA TODAY and National Geographic.
I want to thank you for the opportunity to appear before
you today to discuss some of the critical retirement issues
faced by all Americans, especially some of the issues faced by
older African Americans. Black women, in particular, face huge
financial challenges as they age. You have all heard we are
having a retirement crisis. That is because we are not saving
enough to sustain ourselves when we retire. We all realize it
and we worry about it.
Forty-five percent of baby boomers said outliving their
retirement savings is one of their greatest fears. There is
good reason for that concern. Fifteen percent of Americans have
no retirement savings at all.
Today, we are living longer and thus, we need for our
retirement savings to last longer. Today, a couple aged 62, the
surviving spouse will probably live until 92.
In the past we have had pensions that would provide
financial resources for the rest of our lives. Our fathers and
their fathers knew that their money would not run out and they
would be taken care of. That is one of the reasons people
worked for 25 or 30 years at one company. It was not just for
the gold watch. It was to for the pension.
Today pensions are largely a thing of the past. In 1975,
pensions covered 40 million Americans. Today only 13 percent of
non-union private sector workers are covered by pensions. That
means pensions have been replaced by what I call do it yourself
retirement plans such as 401(k)'s. I call it do it yourself
because it puts the pressure on the workers. The workers have
to figure out how much to save, what to invest in, and how to
manage those investments.
For older Americans, particularly Black women, the
situation is more dire. Many older Americans have endured
decades of discrimination, and as a result they have lower
levels of education, income, and wealth.
Additionally, Black Americans suffer disproportionally from
eight of the top 13 causes of death in the United States. Black
women have the lowest levels of income and wealth, which means
that they need to continue to work as they age. Yet health
problems can limit their ability to continue working.
The impact of these economic inequities has resulted in
multiple generations of poverty, and predictions from
Prosperity Now that the average net worth of Black Americans
will be zero by 2053 if nothing changes.
These economic and health issues have been exacerbated by
the COVID-19 pandemic.
Fifty percent of Americans do not have retirement accounts
largely because they work at small companies or they are part-
time and do not qualify.
Some of the programs that may improve those numbers are
one, auto-enrollment. When a new employee starts, the company
automatically enrolls them in the plan. That has improved
participation dramatically.
Two, a number of states have started State savings plans
and require companies to actually offer these plans to
employees.
Three, if companies, small companies had the option to join
together to offer better plans it reduces the costs both the
businesses and their employees.
They are all complicated and interrelated issues with no
single or simple solutions. If nothing is done, we are going to
see more Americans, especially Americans of color, fall into
poverty.
I want to thank you again for the opportunity to provide
testimony and for your interest. I will be happy to answer any
questions the Committee may have.
Thank you.
The Chairman. Thank you, Mr. Brooks, for your statement.
Dr. Badger, you may begin.
STATEMENT OF JOSIE BADGER, Ph.D., CAMPAIGN MANAGER,
#IWANTOTWORK, NEW CASTLE, PENNSYLVANIA
Dr. Badger. Thank you so much.
Good morning. I would like to thank the Chairman, Ranking
Member Scott for hosting this hearing and inviting me to speak.
I would also like thank the Committee members for attending.
This is an extremely important issue for the largest
minority in America, or in your State, in fact.
As you heard in my introduction, provided by Senator Casey,
I have my doctorate and I am a business owner. I am also a
homeowner, a partner, a daughter, a friend, and of course a dog
mom.
What you did not hear is that I am a person with a
significant physical disability that I can say affects all
areas of my life. I cannot put it into a category like I did
with the other topics those are just elements of my identity.
Having a disability affects my entire life and all parts of my
being. It is the reason why I do not walk or breathe on my own,
my need for 24-hour care, my relationships, my work, and even
how I earn and save money.
It does not affect the way I work, earn, or save money in
the way that you might think it would. I work over 40 hours a
week. I can do all elements of my jobs without accommodations
from my employers. My disability forces me to stay poor and not
save for those big steps that were mentioned earlier, the
American dream, or retirement in general.
When I was growing up, I dreamed of being a marine
biologist. Long story short, I am on a ventilator. I do not
swim. A change of plans ensued. I became a business owner.
However, no one ever told me, quote/unquote, that's a great
idea for you to be a marine biologist or a professor but you
are not allowed to make that much money. No one told me to not
work so hard in school, not to be valedictorian or not to get
my degrees and pursue my dreams. That is exactly what the
system is set up to do, to be prepared for success but not be
able to actually achieve it, at least financially and
stability-wise.
As I was graduating with my doctorate, I was thinking, now
what? I had spent years completing higher education,
volunteering, and working part-time. Most of my peers were
applying for fantastic jobs and comparing their offers about
the best locations, opportunities, salary, and benefits while I
was trying to figure out how to not be too successful.
The reason I cannot be too successful is that I rely on
government insurance programs such as Medicare and Medicaid for
my survival. No private insurance will pay for the long-term
supports and community-based services that I require to just
get out of bed every day and to work in the first place. These
amazing programs, however, have fairly strict income and asset
limits. To be able to survive by having those services, I have
to keep myself poor.
To do so, I started a business so that I could salary but
take job opportunities that I felt called to. Such a structure
has allowed me to work while still receiving the medical care
that could only otherwise be received through nursing home. If
I did not get Medicare and Medicaid, I would be in a nursing
home. This was only possible because I underpaid myself and did
not have savings accounts or retirement.
I can honestly say that it is more work to be able to work
than the work itself.
Some of the barriers to working and economic stability did
change with the ABLE Account. That was the first opportunity I
had to save more than $2,000 due to asset limits. In the past,
I kept my income under those limits because I could not risk
losing those life sustaining services.
However, I opened an ABLE account because it seemed like a
good thing to do and all the cool kids were doing it. I did it,
too. At that point, I had no idea how useful it could be in my
future.
Then, during the pandemic, while I was in a small house
renting with my partner and our two dogs and two cats, I
realized how important having a space that I loved that was
bigger really mattered, as I am sure maybe some of you
realized, as well.
I decided that it was time to buy a home. I knew that I
could easily pay the monthly mortgage payments, but I did not
have even close to what I needed set aside for a down payment.
That is where ABLE came into play for me. It made home
ownership possible.
Through the little bit of savings that I had put into
accounts and a gift, I was able to purchase my home a year ago
today actually--yesterday. According to Facebook, yesterday.
This was only possible because of the ABLE savings
accounts. It is a wonderful program, but as it has been
mentioned, the strict age criteria with it being that you have
to acquire your disability before the age of 26, really limits
the number of people that can receive this type of account. We
need to fix that problem. We need to address an even bigger
issue: the limitations on earning money. The Substantial
Gainful Activity Limit, SGA for short, restricts how much money
a person receiving Social Security Disability Insurance can
earn a month. There are similar limits for SSI, Medicare and
Medicaid.
For SSDI, the limit is currently $1,310 per person. That is
$1,500 less than the Federal poverty limit for a one-person
household. Earning more than SGA means the possibility of
losing life-sustaining medical and health care coverage in
addition to the case benefits.
Because of such policies people with disabilities,
including me, we are capping our employments and earnings and
ultimately our opportunities. It limits our success in order to
just make sure that we are receiving life preserving and
sustaining care.
At one point in time, the asset and income limits probably
made a lot of sense. No taxpayer wants to be giving money to
people who do not need it. However, with medical advancements,
assistive technology, workplace accommodations, and actually
changes in the work world and fields, these restrictions are
actually restricting individuals from pursuing opportunities.
People like myself, who receive and require a high level of
support and medical care, would not have survived previously
without these advancements let alone be able to work in
previous decades. Now not only are we surviving, but we are
capable of thriving.
Thank you so much.
The Chairman. Doctor, thanks very much. I just want to make
sure we can move through our witnesses.
The fourth and final witness is John Iacofano, and he will
provide his testimony and then we will get to questions.
STATEMENT OF JOHN IACOFANO, OWNER, IACOFANO'S CATERING, MOUNT
PLEASANT, SOUTH CAROLINA
Mr. Iacofano. Thank you. Good morning, Chairman Casey,
Ranking Member Scott, and members of the Committee.
My name is John Iacofano and I am the owner of Iacofano's
Catering in Mount Pleasant, South Carolina.
Twenty years ago, as a struggling student with $90 to my
name, I painted a building to get the down payment for a 300
square foot space to start my catering business. Iacofano's
began by preparing deli trays for corporate groups and later
opened three restaurants.
Today, Iacofano's provides catering and food services to
corporate events, weddings, in-flight catering, senior living
facilities, and meal service for non-profits such as Meals on
Wheels. We have 85 employees and six locations across the
country, including Charleston and Columbia, South Carolina;
Charlotte, North Carolina; West Deptford, New Jersey, a suburb
of suburban Philadelphia; Cleveland, Ohio; and Denver,
Colorado. Our average employee age is 45, with the oldest being
78.
During the pandemic we were able to maintain a workforce
and add additional quality employees from large corporate
layoffs. As large corporations began to rehire, we were unable
to keep up with the benefits they offered, specifically
retirement plans. We lost one of our best employees when her
former employer, an international catering company, offered to
reinState her benefits. We offered her over 11 percent more pay
plus success sharing checks but she went back with her former
employer for one simple reason, the bigger firm offered her a
retirement plan.
My small business attempted many times to implement our own
employee retirement plan but were shut down by the excessive
fees along with plan liabilities and administrative burdens my
team could not handle.
At Iacofano's we are on a mission to cover the entire
circle of life for our employees: from health care, competitive
pay, vacation, and more. However, the number one inquiry
candidates and employees ask is, ``do you have a retirement
plan?''
Just a few months ago, Matt Watson at NFP approached me
with a possible solution to our retirement plan struggles. The
SECURE Act had passed through Congress and established Pooled
Employer Plans (PEPs), allowing unrelated employers to join
together to provide workplace retirement savings options
without some of the costs, administrative burdens, and
liability attached to sponsoring a plan on their own. One month
later we are on a conference call setting up our plan and 2
months later we are launching our first employee retirement
plan at Iacofano's.
The new PEP system is a plug-n-play plan that links
directly to our payroll system at a low cost of $2,600 per year
broken into quarterly payments. Our plan provider offers
educational classes to our team; and handles all employee
enrollment, legal requirements, and administrative work. These
cost and administrative savings are the sole reason we are now
able to offer our employees retirement benefits. Plus, these
low costs allow us to offer a very competitive match. These are
new dollars going into the paychecks of our valuable team
members.
Chairman Casey, Ranking Member Scott, and members of the
Committee, I am thrilled to announce that as of today our
employee retirement plan is open for enrollment. For the
majority of my employees this is the first workplace retirement
plan ever.
On a personal note, my father was a small business owner.
He passed away and the business was closed. My mother, as a
stay-at-home mother for 30 years, had to reintroduce herself
into the workforce. Now, at 78 years of age, her current
retirement plan includes $1,450 from Social Security and only
$270 from a large company that she had worked for over 10
years. Had access and education of the PEP plan been available
to my family, my mother would not have to be working full time
to make ends meet in retirement.
The PEP is going to help my employees engage in the
retirement that they once thought they were destined to have.
Our next goal is to continue to grow the diversity of
employees within our company. We are fortunate to work with
Babcock Centers in Columbia, South Carolina, an Adult with
Disabilities Empowerment Organization. Babcock approached us
over 2 years ago asking if we were willing to bring on one or
two of their clients to work in our facility. With the help of
a Babcock representative, we hired a gentleman named Jay. Jay
continues to work for us and is a vital part of our team. If it
had not been for our services providing meals to the Babcock
Center, we would have never known about the opportunities to
hire adults with disabilities.
Small businesses need more information and availability to
hire, train, and provide these new opportunities for adults
with disabilities. This, along with the new PEP plan, will only
help small businesses like mine become competitive employers
and take care of the entire circle of life of their employees.
I would be happy to help this Committee in any way possible
to get the word out to small businesses.
Thank you for your time and I am happy to answer any
questions you that may have.
Thank you.
The Chairman. Thank you for your testimony.
I want to make sure that I am correct about something. I
have pronounced your name more than once now and I want to make
sure I am pronouncing it correctly. I put the emphasis on
``ick-ofano'' and I thought I heard you say--I want to make
sure I am right--more like ``I-cofano''.
Mr. Iacofano. Yes, so it would be like ``ya-cofano''
really, but we have been--it is ``I-cofano''. We say ``I--
cofano.''
The Chairman. Okay, I will try to
Mr. Iacofano. Iacofano. That is okay. You are not the first
person to butcher our last name. You will not be the last, I am
sure.
Senator Tim Scott. I was wondering the same thing about
``ick'' or ``ike''. He just entered another element though, so
we are going to be here for a long time.
The Chairman. Well, we are grateful
Mr. Iacofano. I am not going to say ``ick'', ``ick'' in
catering would not be a good introduction.
Senator Tim Scott. Yes, icky. We will go with ``ike''.
The Chairman. I think we have to give you extra time
because of that question I just asked you, but thanks so much.
We will turn to our questions. I wanted to start with Dr.
Badger. Doctor, I wanted to thank you for sharing your story,
which is both a story about the challenges you have faced, but
also a story of real inspiration, what you have had to
overcome, to open a business and to buy a home and to do so
many other things that you have related today.
In your testimony, you talked about how ABLE was your first
opportunity to save more than $2,000 due to asset limits for
Medicaid. You also said you had not really put much thought
into long-term savings since you had never had the opportunity
to save before. As you put it, the way the system is set up,
you said it was set up ``to be prepared to be successful but
not to actually be permitted to achieve success, at least
financial success and stability.''
That is a powerful statement and, I think, emblematic of
what we are wrestling with here.
You said that it was the COVID-19 pandemic that motivated
you to start saving with a goal in mind. Were is my question:
how did an ABLE account, in your case, help you to level the
playing field for people with disabilities in your case, but
more broadly for people with disabilities who can access them?
Dr. Badger. Thank you so much for the question. Yes, I
believe that ABLE is one of the fundamental areas that will
allow people to be more successful. For me, it was home
ownership and I hopefully will continue to use it to pay off
that monthly mortgage of mine.
I think for other individuals there has been a long-
standing concern and teaching from the system that you, as a
person with a disability, cannot have money. I know a lot of
individuals who are my age and younger who are putting money
under their mattresses or only working in cash which, when I
was redoing our house, we found money in our ceiling. We are
reverting back into acts that were done during the Great
Depression of saving money when possible. The bigger issue is
not having money to save in the first place. I think that is
the next step beyond allowing more people to earn, save, and
know that they are not going to lose life sustaining care to do
so.
The Chairman. That is very helpful, to have you walk
through your own personal experience.
Speaking with people with personal experiences, I want to
turn to Mr. Foley. We heard, as I just mentioned from Dr.
Badger, that her ABLE account, what it means to her and so many
in the disability community. One of the real limitations, one
of the problems we are trying to solve with the legislation, is
the 26-year-old limitation. Meaning that the accounts are only
open to people who have had a disability before their 26th
birthday.
Can you explain why the original ABLE act included the age
limit, which we now want to change, and why it is important to
expand ABLE accounts?
Mr. Foley. Thank you, Senator.
Yes, so the changing it to disability onset before age 26
was kind of a last minute accommodation made back in 2014 from
a scoring perspective for the bill. The entire time folks were
advocating for it and talking about it, a much larger group of
people had been envisioned. It was mostly for scoring purposes.
To the second part of your question, you know, we estimate
that there are as many as 6 million people who would be newly
eligible if the ABLE Age Adjustment Act happened. Those are
people whose--obviously, their disability happened after age
26. Maybe that was an accident. Maybe that was an illness
picked up later in life or someone from military service.
Having worked in this space for quite a while, it is really
difficult to meet a 27-year-old who is recently spinal cord
injured and tell them there is this great product out there but
it is not for you. Or someone coming back from a tour of duty
who has been injured fighting for this country and telling him
or her that ABLE is not for them.
There are 1 million veterans that could be eligible for
ABLE and it is imperative that ABLE be extended to be able to
be a benefit from a financial standpoint, from a support
standpoint, and from a long-term economic development
standpoint for those individuals.
The Chairman. Mr. Foley, thanks very much. I will turn to
Ranking Member Scott for his questions.
Senator Tim Scott. Thank you, Mr. Chairman. I understand
that Senator Lee is available now for questions, and I am happy
to defer to Senator Lee if he is still available for questions
now and I will take the second round.
The Chairman. Senator Lee.
Senator Tim Scott. Sounds good.
Mr. Iacofano, a quick question for you. I know that the
SECURE Act provided you with an opportunity to start your
retirement account today and congratulations. As a former small
business owner myself, I understand and appreciate the
excitement that when you are able to offer new benefits for
that extended family, as I discussed in my opening comments, it
really is heartwarming for you and certainly good for your
employees.
I know that there are several parts or aspects of the
SECURE Act that can be helpful, whether it is reducing the
price or helping to cover the liability exposure. Which of the
two, or other aspects of the SECURE Act, help you start your
retirement account today?
Mr. Iacofano. There is multiple aspects. One major one is
obviously $2,600 a year is the cost to me, broken apart in
quarterly payments which is huge.
Then you have the administrative, the fiduciary, the entire
liability basically is being handled by the plan itself where
with the old plan, before you guys put this new SECURE Act
through, the old plan had the ``one bad apple'' part of it.
Everybody could be liable in the plan. This got rid of
that, which is excellent. The new plan helped to do that.
The two, the liability and the very low cost of $2,600.
Senator Tim Scott. During your opening comments, you made a
statement that caught my attention and I want to ask you a
question and give you a little more time to expound on the
importance of the competitive advantage that comes with the
ability to offer retirement programs to your employees. You
talked about losing a key employee, or at least an important
employee, because they were able to have a retirement system.
They turned down an 11 percent wage increase in order to have
an opportunity to secure resources in retirement.
How important is having something like the SECURE Act in
place and you launching your own retirement plan in retaining
your best and brightest employees?
Mr. Iacofano. It is--I will not be competitive if I do not
offer retirement. This allows me to not only offer retirement,
become competitive, be able to obtain new team members. Due to
the low cost, it also allows me to match. We will be matching
100 percent on the first 3 percent and 50 percent on 4 and 5
percent, which makes me extremely competitive against very
large corporations and puts us on the same level.
Senator Tim Scott. Mr. Iacofano, I would say that you are
doing better than most corporations. One hundred percent on the
first 3 percent is pretty remarkable. That is fantastic.
Mr. Iacofano. Thank you.
Senator Tim Scott. It tells me that you care about your
employees.
Mr. Iacofano. Well, it is the low cost. It is the low cost.
Senator Tim Scott. That is fantastic. It allows you to
transfer those resources or the benefits to your employees
through the additional matching opportunities. That is good,
that is being a good employer and something that we should all
celebrate.
You also do something else that I think is really important
to the workplace and very important to maximizing human
flourishing. You look for ways to hire folks who are very
talented, who might have varying skill sets, different talents,
but also different challenges to coming to the workforce. I
know that you have done a good job of offering opportunities to
folks with disabilities.
How can we encourage more companies to follow your path in
recruiting and retaining vital workforce talent to include
those folks with special needs or disabilities?
Mr. Iacofano. Well, I was fortunate enough to work with
Babcock Center or else I would not have even known that there
was such a thing as employing adults with disabilities, nor
would I even know the need for it.
We have very talented workers out there that need jobs. I
believe in South Carolina alone and in Pennsylvania the
unemployment rate for adults with disabilities, in Pennsylvania
I believe it is 61 percent and South Carolina is about 67
percent. Transportation is a huge need. Jay, who is an adult
with disability and been with us for over two years, we pick
him up and drop him off to--pick him up from home and drop him
off at home every day. Transportation is huge.
How can we create the space or what needs do the adults
with disabilities have in the workforce? Whether it is special
equipment, whether it is the ride to work. What do they need to
get to work and be able to be successful at work is the
question. I believe that is where our resources can go.
Senator Tim Scott. Thank you, Mr. Iacofano.
With my last 30 or 40 seconds, Mr. Brooks, I would like to
ask you a question about retirement portability. Said simply,
when you have a small retirement account, $5,000 or $6,000 and
you change jobs, oftentimes what happens is what we call
leakage. You just take that money that is in your retirement
account and you cash it out. You pay a penalty. You have to
claim it as ordinary income. Those retirement dollars are gone.
I worked with the DOL and a guy named Bob Johnson to help
create the framework for auto portability between retirement
plans. How important is this reform for those living in the
underserved communities? How can we continue this progress?
Mr. Brooks. Yes, I think portability is critical. As you
said, people cash out their plans, especially if they have a
small amount. Part of it is the company's do not encourage you
to merge them.
I think what might help that is some financial education
because most of the people who--many of the people who cash out
are low-income or young. I do not think they realize the tax
implications when they do cash out until they have to file
their tax returns.
Senator Tim Scott. Then it is a big surprise.
Mr. Brooks. Yes, a big surprise.
Senator Tim Scott. Thank you, Mr. Brooks. Thank you, Mr.
Chairman.
The Chairman. Thank you, Ranking Member Scott.
We will turn next to Senator Kelly.
Senator Kelly. Thank you, Mr. Chairman.
I want to followup on a couple of Senator Scott's
questions. This question is for Dr. Badger.
Dr. Badger, Employment First is a framework that seeks to
make integrated employment the goal and priority for states and
public systems. In 2017, Governor Ducey, the Governor of
Arizona, signed an executive order declaring Arizona an
Employment First State, which required state agencies to
partner with outside vendors to improve job opportunities for
people with a disability. Stakeholders across the State worked
collaboratively to make this happen.
Arizona is one of many states working on this, and it is a
priority for the Federal Department of Labor. Could you
describe some successes that you have seen that more states
should try to emulate?
Dr. Badger. Absolutely. Thank you so much for that
question.
I was part of--through the #IWantToWork campaign we worked
to establish our Employment First legislation. I think what we
are seeing, and it is really trend based, is that states that
have had Employment First specifically legislation and
executive directives, they are having progressively more
individuals with disabilities who are employed. I think that if
you start looking at the numbers, and there was a recent report
put out by ACL, 30 Years of Living, you will see that the
states that have had those pieces of legislation on the books
longest have the highest employment rates. I think we need to
look at the data to show the success.
Senator Kelly. Beyond the legislation that is already on
the books, what are the top one or two ideas to continue to
increase the employment rate for adults with disabilities?
Dr. Badger. I think going forward we are looking at making
sure that that mindset of Employment First, making sure that
competitive integrative employment is the mindset that we hope
for all individuals, starting with IEPs in high school, is key,
and endorsing that as a State. Also, really working on the
collaborative efforts that you mentioned to make sure that our
policies and actions in the country, State and locally truly
support that employment work of people with disabilities.
Senator Kelly. Thank you, Dr. Badger.
Dr. Badger. Thank you.
Senator Kelly. Mr. Foley. Mr. Foley, your testimony
mentioned the increased likelihood that individuals with
disabilities would be underbanked. We know that asset and
income limits make saving complicated. I am also curious about
access to credit.
Could you describe what the challenges are for gaining
access to credit and building credit over a lifetime for adults
with disabilities?
Mr. Foley. Absolutely, thank you for the question.
We have done research that indicates that folks with
disabilities are two to three times less likely to have access
to the credit they need than the general population. This goes
along, I think generally, with the information about being
underbanked.
Basically, people with disabilities would benefit greatly
from financial education, financial counseling, credit
education, and credit counseling. Many of the financial
education curriculums out there and credit bureaus are more and
more doing a lot of work to try to reach low--and moderate-
income communities and we work closely with several of them to
make sure that people with disabilities are included in that
work.
Many people with disabilities are also what is known as
credit invisible. You know, if you do not have a bank account
and you are not working, there are not a lot of accounts or
credit bureaus to pull from. I know the industry is working on
new models to help alleviate these issues. It is definitely a
concern with regard to credit access to folks with
disabilities.
Senator Kelly. Mr. Foley, do the credit agencies use any
different standards for individuals with disabilities?
Mr. Foley. You know, I would certainly, you know, from an
income standpoint, SSI and SSDI qualifies as income. I do know
that from a scorer's perspective, medical debt has begun to be
treated differently in recent years with regard to its impact
on credit scores.
I guess the short answer to that is yes, to some extent,
but there is still more work to be done.
Senator Kelly. All right, thank you, Mr. Foley. Thank you,
Dr. Badger.
The Chairman. Senator Kelly, thanks very much. Now we will
turn to Senator Lee, who is joining us virtually.
Senator Lee. Thank you, Mr. Chairman.
Savings and investments enable us to serve our respective
communities and increase our future capacity to afford
necessities. Financial capital, in fact, underpins social
capital. Savings allow us to form and expand families and to
surround ourselves with neighbors and institutions that enrich
our lives.
Savings make retirement possible, which provides us with
the opportunity to invest ourselves and our time more deeply in
our communities.
Mr. Iacofano, what are some of the ways in which empowering
your employees with the opportunity to save for retirement
might have a trickle-down effect that benefits other members of
the community in the Mount Pleasant area? For example, do you
think that making retirement savings possible for your
employees allows them to invest their time and their resources
more fully in their communities?
Mr. Iacofano. Well, you are talking about having to have
people unprepared for retirement and having to work, going to
work all the way until your 70's and your 80's because Social
Security is not going to give you the full retirement that you
need. Therefore, in the community, are you able to be part of
your community more? Are you able to donate time to your
community? Or are you going to be working 50, 60 hours a week
when you are 70, 80 years old?
Really, right? As you age, you start to donate more time
and resources and knowledge to your community. Are we going to
have the ability for our aging population to do that, is the
question? I would say no.
Senator Lee. Thank you.
In 2019, Congress passed legislation that created Pooled
Employer Plans to provide businesses with more flexibility in
how they can band together with other businesses to offer
retirement plans to their employees. I have heard from Utah
companies and Utahans seeking to save for retirement, that this
has been a great benefit for them.
Mr. Iacofano, you mentioned in your testimony that the
ability to provide these Pooled Employer Plans, or PEPs, to
your employees will change the retirement that they once
thought they were entitled to have. How have these plans
benefited your employees? Are there any additional barriers
that you face as you seek to create opportunities for your
employees to achieve their retirement and the kind of
retirement they desire?
Mr. Iacofano. The biggest barrier is knowledge and
understanding of how important it is, right? When you are 20,
30, maybe in your 40's, you are not even thinking about
retirement. You are not thinking, that is way off in the
future. By starting this plan, it forces my company to educate
all levels, all age levels of employee within the company and
it begins to focus on the retirement. With the match, with the
PEP and the SECURE Act being put in, it allows me, due to its
being so low cost, allows me to match.
What that is going to do is really, as any employee, you
should be donating 5 percent of your wages because we are going
to be matching 4 percent. Now you are putting 9 percent away
toward retirement. Whether you do that 401(k) or Roth is up to
you. Nine percent will be put away and you are donating 5 and
we are giving you 4. This is allowing us to educate what
typically somebody would not be paying attention to.
Senator Lee. Thank you, that is helpful.
Mr. Brooks, you mentioned in your testimony that under the
majority of today's retirement plans the responsibility falls
on the individuals to figure out how much to save, in what to
invest, and how to manage their investments. What is your
assessment, Mr. Brooks, of the financial literacy of Americans
when it comes to retirement savings? Is there better financial
literacy for some types of retirement savings accounts than for
others?
Mr. Brooks. Well, financial literacy as a whole, there are
more courses offered--actually mandatory courses--at the high
school level where I think they have to start. Not that many.
When it comes to financial literacy as a whole, I think we are
pretty weak.
Now there are companies who, along with their plans, offer
some sort of support. My experience has been that many do not.
When I say employees are left to themselves, they can call
possibly an 800 number but at one time human resources
companies--I am sorry, human resources departments offered that
kind of assistance. Now companies have cut back so that is not
available anymore.
Senator Lee. Thank you.
Thank you, Mr. Chairman. I see my time has expired.
The Chairman. Senator Lee, thanks very much.
I want to acknowledge some Senators who joined our hearing,
Senator Rick Scott, as well as Senator Warnock. I know we are
awaiting some other Senators to arrive. In the interim, I will
start with another question. If other Senators arrive, I will
cut myself off.
I wanted to turn to Mr. Rodney Brooks. Mr. Brooks, you
examined the real world impact of retirement policy on people
working hard to save for their future. Many proposals that have
been discussed today have looked at ways to improve retirement
accounts for people who already have access. We have also heard
form people who face steep barriers to long-term and stable
employment or career advancement, which would provide them
access to retirement accounts. Unfortunately, we know that
communities of color and people with disabilities are more
severely impacted by these issues.
I am ask you kind of a question that you made reference to
in your opening but I wanted to reiterate some of it. What
steps need to be taken to increase long-term savings for those
who have traditionally struggled to access stable retirement
accounts, such as those holding multiple jobs or facing
difficulty holding a job long-term?
Mr. Brooks. One option, I think, is the State savings plans
that are being offered. I think a dozen states are offering it.
Again, those are offered through, mostly through employers.
One option might be a baby bonds type program that has been
proposed by economist William Darity and in legislation
proposed by Senator Booker that would basically provide say
$1,000 to a baby born anywhere. The amount depends on the
income of the parents. By the time they are 18, they will have
some income to invest for either college education or to buy a
house.
Morningstar basically said a baby bond program would cut
the racial wealth gap in half.
The Chairman. Thank you very much. I appreciate you
bringing your experience to bear in providing suggestions for
steps we can take.
I want to turn next to Dr. Badger and Mr. Foley, maybe a
kind of a joint answer or a question for both, depending on who
wants to take it first. You have both worked over the years to
improve economic access for people with disabilities and you
both have personal experience with some of these challenges we
have talked about.
Mr. Foley, your work at the national level and, Dr. Badger,
your work in Pennsylvania have given you important perspectives
in this work not only professionally but personally.
Mr. Foley, in your testimony, you put it simply. You said
``Asset and income limits discourage savings, work, and hope.''
You have both discussed, both Dr. Badger and Mr. Foley have
both discussed the asset limit for Federal benefits and how
ABLE accounts have helped to address part of that issue or part
of that problem but other challenges remain.
Maybe we will start with Dr. Badger because I know you made
reference to some of these issues when I was calling the time
or cutting you off for time. What are the one or two other
actions that you think we need to take to make it possible for
more people with disabilities to obtain jobs and be able to
plan for their economic future? I will go with Dr. Badger, I
will give Pennsylvania priority here, and then Mr. Foley.
Dr. Badger. Thank you, Senator.
I think that we need to look at other options allowing
people to earn more. I think some of that is expanding the
Medicaid buy-in for workers with disabilities. In Pennsylvania
it is called MAWD, Medical Assistance for Workers with
Disabilities.
The other part is we need to start looking at these issues
such as retirements. At this point, those of us who require
medical assistance, Medicaid or Medicare, or cash benefits
cannot have liquid savings accounts. We cannot have retirement
that can be liquidated. We need to start looking at different
savings plans that can be permissible that would allow us to
retire.
ABLE is wonderful and they are still saying it will take
about $1 million to retire comfortable, and that is not even
close to what we can save.
Thank you.
The Chairman. Thanks very much. Mr. Foley.
Mr. Foley. Thank you, Senator.
Yes, Medicaid buy-in programs and, you know, I would like
to put out the idea of a national Medicaid buy-in program that
met certain criteria that was portable would certainly go a
long way to helping people with disabilities seize new
opportunities outside of a State that they might be currently
working in.
I still think ABLE Age Adjustment Act is a huge piece of
what we have seen drives savings, drives work, drives small
business development.
I will circle back to that original quote. We are telling
18-year-old kids with disabilities not to save, not to work.
Even if you do, you will not be able to save your money. We
have got to do something about that $2,000 asset limit because
those are the formative years. You know, that first job, that
second job where you learn a work ethic, you learn that you can
save money to buy baseball tickets or go out to eat or whatever
are just really, really important for building long-term stable
employment.
Without those experiences, without those learnings, you
know, a lot of people with disabilities will not be able to
build that career, build that retirement account and purchase a
house. I think we definitely have to do something about that
$2,000 asset limit, as well.
The Chairman. Thanks very much.
I will turn next to Senator Braun and then, after that,
Ranking Member Scott if you want to start another round.
Senator Braun, who I think is joining us virtually.
Senator Braun. Yes, thank you, Chairman Casey.
My question here in a moment is going to be related to not
building wealth in the sense of retirement plans and so forth.
It is going to be preserving wealth. Being a business owner, I
found it easier to put together--especially when you get to a
certain size--good retirement plans. The real wrestling match
and the depleter of wealth in many cases is the wrestling match
you have with the health care system.
My question is for Mr. Iacofano, in the sense that I know
he used the concept of pooling, allowing smaller businesses and
entities to pool together to get some of the benefits that you
get in any case where you align forces, you kind of increase
your bargaining power.
I am concerned that whatever you do there, as you are
running a company, you still have the biggest challenge for
your company and your employees, and it is our broken health
care system. Thirteen years ago I took it on when I had 300
employees, just large enough to where you did not need to pool
to get the benefits that were largely not there for companies
my size.
I am interested in seeing what your issues have been with
health care because I think it is very analogous and I think it
is the biggest depleter of wealth because of the costs and the
fact that, in my case, I was able to freeze health care costs,
make my employees engaged consumer focusing on avoiding the
system, paying for 100 percent of wellness, but getting them to
be in unison with me to take on a challenge that now has--
unlike many other companies--become something that is not as
dominating as it used to be.
Mr. Iacofano, I would be interested to hear your challenges
with health care. Do you think pooling and associating by being
able to team up with other companies your size would be a
beneficial tool? The health care industry makes it tough to do.
Let me know your thoughts on health care as being analogous to
what you did with retirement.
Mr. Iacofano. Thank you, Senator Braun. This is--I do not
know that we have enough time for this discussion. Every year
it is a challenge for me to just keep my health care. I do not
have enough participation, yet we pay approximately over 76
percent of the health care costs for our team members. Every
year I have to increase the cost, the deductibles, and
everything just to--and the cost of the health care goes up.
The deductibles go up, the health care goes up. I try to take
on more of the burden. I cannot get the--the importance of
health care, the education of the importance of health care is
very difficult as well for employees to understand especially
depending on the age, whether somebody needs health care.
To do a pooled employer plan would be unbelievable. A a
matter of fact, I am from Cleveland originally. When my father
was a small business owner, Cleveland had something like that.
We only had three or four employees but we benefited at the
time. I cannot remember the name of it but I know we benefited
at the time from that pooled employer health care plan that was
provided. It was some type of business group that was together.
That would be unbelievable. Every year, I a sweating
whether or not we are going to be able to even provide
insurance for our team.
Senator Braun. For you and anyone else listening out there
today, I have dropped a bill called the Fair Care Act, which is
the most comprehensive approach to what you could do here in
the Federal Government to make it consumer driven, embrace
transparency, embrace competition. The industry runs like an
unregulated utility in that they disguise themselves as being
free enterprise with none of the characteristics.
I think that we need to pay attention to that because
regardless of what you do on retirement and keeping your bottom
line healthy, it is like a tapeworm on your business--and I
think Warren Buffet coined that term.
I would be happy to reengage with you where we have more
time. Anyone else listening out there, get a hold of my office
if you want to see what we can do for the Federal Government.
Sadly, the clout of pharma, of hospitals, providers and
insurance is so heavy that most Democrats who bring health care
as the most important issue there run into issues where they
are not willing to reform the industry before they want more
government involved with it.
I think you need to do the reform first before you tackle
how government gets more involved with it. For you and any
other small businesses out there, reach out to our office. I
will share with you what I did in my own company to keep health
care costs flat and to where my employees are healthier and
spend less on health care now than they did 13 years ago.
I think my time is up and that is a lot to digest. Thanks
for taking the question. Let's reengage down the road.
The Chairman. Thanks, Senator Braun.
I will turn to our ranking member, Senator Scott.
Senator Tim Scott. Thank you, Mr. Chairman.
I would like to talk to Mr. Brooks about the importance of
financial literacy for some portion of my time. It is important
for us to recognize that financial literacy is critically
important. We should start the conversation not when we are in
our 50's or early 60's, but in our 20's. Frankly, even in high
school it would be importance for us to have that engagement.
As we know the magic of compounding interest takes time. If we
have time it is miraculous, comparatively speaking, than
starting your conversation about retirement in your 40's.
Mr. Brooks, would you like to weigh in on the importance of
starting early in the financial education and then starting
early with investing in your own retirement?
Mr. Brooks. Sure.
As I mentioned before, a good first step would be some sort
of requirement of financial literacy courses in high school.
There has been some good success for some programs that have
actually started before high school.
One of the advantages of a program with financial education
for people in elementary school, for instance--and there are
some like Ariel Academy in Chicago--is that in addition to
teaching the kids, they teach the parents, as well.
I think the biggest help would be requiring, basically
making a financial literacy course a requirement in high
schools, and maybe even junior high schools.
Now as people get older, it is harder but it is still
important. I think using people going into community centers,
senior centers, I think all of that is useful.
Now we are actually seeing professional athletes basically
take on the cause.
I think that can make a big impact with young people.
Senator Tim Scott. Thank you, Mr. Brooks.
I know that a few years ago, Chairman, I started something
called Financial Football where we partnered with the NFL and
Visa to bring a Madden-type game of football to high schools
throughout the country. Specifically, we started at home in
South Carolina at my alma mater Stall High School. We literally
had teams playing against each other, students joining teams.
We brought in a couple of Carolina Panthers to coach the team
so that we could have a conversation and a debate around issues
of savings and retirement and investments like mutual funds
versus individual stocks and derivatives.
The more complicated the question the more yards you gained
or the pass was like a hail Mary. That turned out to be a lot
of fun. If we could find a way to make financial literacy a
little more engaging, financial education a little more
interesting for some of the young folks in 8th and 9th grade,
we might find ourselves having a better future for those young
folks when they are entering into the retirement years.
I will close with this comment. When I was selling
financial plans and some retirement plans, I would say to the
folks I was talking to that a 19-year-old that saves $100 a
month at 12 percent interest will likely have more money than
the 45-year-old that saves $1,000 a month at the same interest
when they hit age 65.
The Chairman. That is remarkable.
Well, Ranking Member Scott, thank you for those questions.
We are approaching the end of our time so I wanted to provide a
closing statement and then I will turn to Ranking Member Scott.
As we heard today, millions of Americans face barriers to
achieving economic independence and a secure retirement. People
with disabilities and communities of color face unique and
overlapping challenges. Federal asset limits make it easier for
people with disabilities to keep their incomes low than to
build long-term savings accounts or build a long-term saving
account. Workplace biases keep both people with disabilities
and communities of color in lower paying and sometimes in
multiple low-paying jobs.
These challenges are building up over lifetimes and across
generations, making the dream of retirement almost impossible
to achieve for so many.
We must find ways to eliminate the employment gap and the
wage gap faced by people with disabilities and folks in
communities of color. Passing legislation like the ABLE Age
Adjustment Act, Senate Bill 331, will provide millions of
Americans with disabilities, including over 1 million veterans,
a pathway to savings.
I look forward to working with all of my colleagues to
advance this critical legislation and other policies that we
have heard about today to address these issues. I want to
thank, in particular, Ranking Member Scott for his own
perspective on this and his ideas and for bringing his own
personal experience to bear on these issues.
Ranking Member Scott, I turn to you.
Senator Rick Scott. Thank you, Mr. Chairman. Thank you once
again for holding a very important hearing that so many
Americans, especially folks in their golden years and people
with disabilities, will learn important information as they
watch this over and over again, I am sure. This is an important
hearing about an important topic that will have an impact
positively or negatively on retirement years for so many folks.
It is my heart that we can do better. We can do better in
educating and informing the public about the importance of
starting early. We can do better about informing the public
about good legislation that has been passed, whether it is the
one that you have been talking about or the SECURE Act.
It is really importance for us to look at strong business
owners like John Iacofano, who started his retirement plan for
his employees today with 100 percent match. The more education
we have, the better off people will be and the more we will
enjoy those golden years.
I want to thank Neri, my staff director, as well as my
staff and Ben Hobbs who helped put this together for us today.
Nothing happens by yourself. Nothing happens in a vacuum. We
are really blessed to be surrounded with really highly educated
individuals that are motivated to make sure that every single
American has a better chance in retirement than they did before
this hearing. Thank you for your hard work and I look forward
to our next hearing.
The Chairman. Ranking Member Scott, thanks very much.
I want to reiterate what you said about our staffs. We are
lucky. Stacy Sanders, who is over my left shoulder here,
certainly fits that description of someone who works with her
team to make these hearings informative and make it possible
for us to have a hearing like we have had today.
Senator Tim Scott. Mr. Chairman, I did mean to mention my
other staff who is behind me as well, Sarah.
The Chairman. I appreciate that. Thanks.
If any Senators have additional questions for the witnesses
or statements to be added, the hearing record will be kept open
for 7 days until next Thursday, July 22nd.
Again, I want to thank our witnesses for bringing their
testimony today and making themselves available and especially
bringing their expertise to bear, both personal and
professional, on these issues that confront so many
communities.
Thank you all for participating today. This concludes our
hearing.
[Whereupon, at 11 a.m., the Committee was adjourned.]
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APPENDIX
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Prepared Witness Statements
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