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Statement of Chairman Tom Harkin (D-IA)

At the HELP Committee Hearing “The Wobbly Stool: Retirement (In)security in America”

“I want to welcome everyone to this hearing on retirement security, a timely issue that is of critical importance to every American.  

“A recent survey found that 92 percent of adults aged 44-75 believe there is a retirement crisis in America.  Are they right?  Is there a retirement crisis?  Well, consider the following statistics:

  • Over a quarter of workers do not have any meaningful retirement savings at all – none. 
  • Nearly half of the oldest Baby Boomers – who will turn 65 next year – are at risk of not having sufficient retirement resources to pay for basic retirement expenditures and uninsured healthcare costs. 
  • The gap between what people need for retirement and what they actually have is estimated to be $6.6 trillion.

“I think those numbers make it perfectly clear that the system is failing many Americans, and that the ‘three legged stool’ of retirement security – private pensions, personal savings and social security – has gotten awfully wobbly.
“It used to be that many workers could rely on defined benefit pensions.  Those plans are one of the best ways to ensure that workers have a secure retirement because they provide a predictable, guaranteed source of income that workers can count on for the duration of their lives.  But, unfortunately, the traditional defined benefit pension is an endangered species.  The number of employers offering these plans has fallen drastically over the past three decades.  Now, less than 20 percent of workers in the private sector have the security of a defined benefit pension.

“The vast majority of employees with any retirement plan at all just have a 401(k), but those plans do not provide real retirement security.  They leave workers exposed to the constant risk that the plans’ investments will perform poorly.  Look at what has happened to people’s 401(k)s over the past few years.  Billions of dollars of retirement savings have just evaporated, and lots of people getting close to retirement saw any chance they had of retiring vanish overnight.  401(k)s also do not necessarily provide workers with guaranteed lifetime income like traditional pension plans.  That means that workers and their families are forced to bear the risk that they will outlive their retirement savings.  

“Plus, in these troubled economic times, families are facing unprecedented challenges and saving for retirement just is not an option for many.  Wages have been stagnant for years, and people are working harder and longer than ever before.  But they still cannot seem to meet the costs of basic everyday needs, like education, transportation and housing, let alone save enough to support them in their old age.

“For many Americans, the only retirement security they have is Social Security, but that, too, is under siege.  There are those that want to privatize the system, cut back benefits and raise the retirement age.  They say that everyone should just work longer and that retirement is a ‘luxury.’  Clearly, those people do not swing a hammer for a living.  They do not toil in our corn fields or work on our oil rigs.  For Americans who work in these physically demanding jobs, working longer simply is not an option.  A lifetime of hard work takes its toll, and at some point, a person just cannot do it anymore.  

“We are facing a future where no one other than the rich will have the opportunity for a safe and secure retirement.  People that work hard for their entire lives will find themselves teetering on the brink of poverty, unable to pay the basic costs of living.  That is going to have drastic consequences for families and our country as a whole.  

“It is time for our nation to face the retirement crisis head-on.  That is why, as Chairman of the Committee on Health, Education, Labor and Pensions, I am making retirement security a priority.  Over the coming year, I plan to hold a series of hearings examining the crisis in retirement security from a number of different angles, and I look forward to working with my colleagues on comprehensive reforms to help workers save for retirement and ensure that they have a source of retirement income that they cannot outlive.    

“Fortunately, retirement issues have always been an area where we have been able to reach across the aisle and work together, and I hope that we can continue to that.   

“Thanks to all of you for being here today to discuss this important issue.”