Helping the Middle Class Save for Retirement
When it comes to saving for retirement, putting a little bit aside each month and managing it prudently over the course of your working years can go a long way.
I serve on the House Ways and Means Committee, and this week we approved legislation that will make it easier for middle-class workers to save and plan for retirement.
About 70% of households with members age 55 or older have at least some sort of retirement nest egg. But times have been tough for the middle-class, and as many as two out of three workers are at risk of falling short of what they’ll need for retirement.
Good financial planning, sound investment strategies and a diversified portfolio can mean the difference between having what you need for retirement and coming up short — even for a modest nest egg.
Getting good advice is crucial. I saw its importance with my own father, who benefited from wise financial planning advice and strategies for his own, very modest savings. His financial adviser, who got very little out of it, steered his savings into investment classes that protected him from losses and ensured he was able to support himself in his retirement.
But a rule proposed by the Department of Labor — known as the fiduciary rule — could make it harder for middle-class workers to obtain the financial planning advice they need to make sound decisions about their retirement savings. It will make financial advice more expensive and ultimately leave more Americans unable to support themselves in retirement.
The rule was rooted in good intentions — protecting the unsophisticated investor from scam artists and bad actors in the financial planning industry. But the rule, like many things in Washington, is well-intentioned but poorly-implemented. And the end result is a flawed proposal that will harm the very families it purports to help.
It’s just another example of Washington, D.C. bureaucracy run amok, and its victims will be the middle class. The Daily Caller covered this week’s hearing on the legislation:
“What frustrates me is that it hurts the very people who need this advice the most — the unsophisticated investor,” Pennsylvania Republican Rep. Patrick Meehan said. “We are denying to so many people out there the opportunity to have this kind of advice. Which the rich get.”
Wealthy Americans will always be able to afford investment advisers. The Labor Department is wrong to want to make it harder for hardworking families to get good financial planning so they can save for college and retirement.
The bipartisan bill passed this week, the SAVERS Act of 2015, will stop the Labor Department’s misguided regulation and protect access to the tools Americans need to plan for the future. It will give Congress a final say over the Labor Department’s rule, and replace it with a standard that will raise financial planning advice standards while ensuring the middle class can access affordable planning services. I’m hopeful it will become law soon.