tv Washington Journal Charles Jeszeck CSPAN November 21, 2017 3:20am-3:54am EST
watch live coverage at 9:30 a.m. eastern on c-span two. then, a look at argentina's changing political landscape and some of the reforms proposed by the president after the recent midterm elections. live coverage from the hudson institute starts at noon eastern also on c-span two. tonight, former vice president joe biden and ohio governor john kasich talk about bipartisanship in the trump zero. that starts at 8:00 p.m. eastern. >> next, a look at a new government report on u.s. retirement savings rates from washington journal. this is 30 minutes. it is time for our weekly money segment and this week, we take a look at a new report on how americans are doing in saving for retirement from the government accountability office. the person behind this report, charles jeszeck, joins us now. good morning.
what is the government accountability office? guest: we are the nonpartisan works forive arm that committees of congress, majority leader ryan, minority leader pelosi, mitch mcconnell, chuck schumer, part of the administration. we respond to request for information from congressional committees as well as legislative mandates. sometimes a piece of legislation , we will ask to look at a particular issue. host: so if i understand it correctly you get those from , members of government, but it is the organization taking a look at retirement from the united states? guest: yes, that is correct. the comptroller general has the authority to initiate work on his own for issues that he feels are of such national importance that it is necessary to alert the public and congress of its significance. host: a comprehensive reevaluation needed to permit better future retirement security. before we go into details how
, are we doing us a country in saving for retirement? guest: overall, and the reason we put this report out is, for a lot of people in this country, retirement prospects don't look great. if you look there are three , major pillars for contributing to retirement. social security, employer pensions, and private savings. each one of those is facing real fiscal challenges and fiscal stress. so for example social security , will only be able to pay three quarters of promised benefits by 2035. occupational pensions or private pensions, about half of private sector workers do not have access to any sort of retirement savings plan. for those who do, they are on 401(k) type plans. while they can provide retirement income, they put more responsibility on individuals. for private savings, with the increase in debt over time, although it came down from the recession, increased health care costs. most income growth going to higher income workers. savings, e increase in debt over time, it did come down from the
health carencreased cost, most income growth going workers, it's me increasingly difficult for many working people to save for retirement. host: to get in on the conversation, do so with our guest. from.to choose working adult saving for retirement, have questions, 02-748-8000 is the number to call. maybe you are retired already and drawing on retirement 202-748-8001. you can also tweet us at c-span wj. defined ber of contribution plans, 401(k) lans, according to your report 015 -- type of the plans, what does the number suggest to you? guest: there are a lot of plans, by because you are covered a plan didn't mean you are contributing to retirement, a offer times your employer a plan, you have to contribute, many employers will provide but only if you contribute yourself.
workers, even of if covered by a plan, doesn't ean they have savings in that plan when they retire. host: we hear all the time, that people money, why aren't taking advantage of it? guest: good question. a lot of times people may not be aware or they may have so many other income constraints, may wantoan, mortgage, a family. again, most income growth over to last 20 years has gone highest 20% of workers, most other workers, lower income haven't seen that kind of income growth and of course rising health care cost are a well.m, as host: those are number of plans out there, talking about people who actually contribute them. tell us a little bit about the amount of those things, is there generic or average amount that is in these type of plans and how does the number up to the amount you need when you retire? guest: one thing we found was 29% of all workers, in fact, have either traditional
defined benefit plan or retirement savings at all. plans,ple who are in the the average amount of savings is at, ding on what you look between 50 and 100,000. that, t to retirement, that may seem like a large amount of money in a lump sum, remainder ey to last of retirement years, it is really a challenge, not all that money. people are living longer today, today, you have the average life span you are are a woman, you over 88 years of age. longer, are living they need more money to make it last throughout all the retirement.ears of host: those are the numbers on the screen. harles jeszeck from the government accountability office to talk about the latest report retirement k at savings.
gao.gov, if you want to go to and read for yourself. we'll take calls. michelle from minnesota, you are with our guest. you are a working american. go ahead. caller: yes, i'm a working american, been working since 16 years old. recommendation is to start saving as early as possible. paying to start yourself the 10%. money ople wait to save after -- host: you are breaking up a little bit. caller: oh, okay. sorry. my comment is people have to pay hemselves first and start saving as soon as possible. a lot of people say they don't save, but they wait until all the bills are don't have money to say. the key is paying yourself 10% you hen pay your bills and live within your means and still save. i started saving when i was in early 20s. i started putting 10% away.
20% away and i put and frankly i'm just a regular i'm approaching $8 or in my 0 in my savings investment, you can do it, just paying yourself over many, many years. host: got you, caller. thank you. guest: congratulations, that is you have been able to do that and are committed to that, that certainly will help in your retirement. you know, for a lot of people, you are right, putting money in irst, making it priority is something that is really important that people should do. for here are people, example, who lose their jobs during the great recession, a people lost their jobs, some of them had to take money to of retirement accounts basically avoid losing their homes. you can have a health shock, get again, take the money out is just sometimes it really hard choices people have to face.
you are right, basically today they want to have secure retirement, have to start saving at an ing rigorously early age. host: what is formula, how much sheld you be save something started there, how much should you save at that point? sooner, the better. certainly i think that is helpful. one thing to keep in mind, there is still some sort of old rules for example, ion, many pension plans, even 401(k) ype plans will not allow workers under age 21 to participate in the plan. that is something that is from the early days of erisa. erisa is? guest: federal law governing pensions in the united states. host: thank you. guest: the younger workers, even if they want to save, sometimes not have the opportunity to save in their employer's pension plan because excluded.been host: from retired worker in
florida, brenda, you are next, go ahead. yes, i retired at the age of around 52. later onrt disease and had breast cancer, i filed for disability, got it after working 35 years. the key was working 35 years. to start putting in an ira, where i worked, from the time i did work. i retired, i started etting social security, medicare and drawing on my ira 59 and a half. the key to retiring is to get stay out of debt and spend your money wisely -- there is one more sell a home if you later in life, say you have a second home or something, put money into a certificate, where you are at least earning
2.5%, on $100,000 that is $2500 times five year is almost $12,000. host: caller, thank you, good there. guest: yes, i would say, very good advice, to the extent you able to do that. you have overcome serious challenges, i applaud you for that. things that definitely people can do that, save money if they can sort of doing vantage of smartly things around their -- selling a home and so on, which raises about financial literacy. people often don't know the what the best choice, financial choice, financial action for them to take. that is something as a nation we have to do work on, as well. plans, pecially 401(k) you have options and funds you can draw. how much education does a fund to provide and how much -- where else can you go as far as
that?ing more about guest: absolutely. 01(k)'s put a lot of responsibility on employees. they have to figure out how to contribute. better, they also have to take into account other things going on in their lives. contributing, you figure out where to invest the are you w much risk comfortable with, what kind of options, what about fee? options cost more than others, so this is all of a problem. to , if you are able maneuver all this and get to retirement and you have a good money, you have to figure out how do you make that your last for remainder of retirement, how do you spend it down? purchase annuity with part of all of it, strategically draw that money down, take that money sxout invest it? are all things someone has to figure out. any employers will provide information to -- they'll bring
information provide to participants, to workers to help them with this. many people, they don't, and really what they hould do is get financial advice from a reputable firm. host: we have a viewer on our should be d, mandatory you contribute 401(k) % get something of the company matching. the first part, should be mandatory? some other countries already have that, for example, nest program, th there is -- they are making it andatory for employees to put money into basically a 401(k) type account. making lem with things -- well, many people have concerned about making things or universal because one, they may have other inancial need, a sick child, they may have something they ave lost their job, other people just philosophically are
into d to putting money being forced to putting money in. of eneral, there is a lot support, when we did these xpert panels, there was a lot of support for making retirement a o mandatory or universal action. ost: let's hear from retired person in west virginia, mike, go ahead, you're on. 1963, : yes, i graduate i'm 72. 65 and iup until i was thought i was going to be okay did.etire, and i and i lost biggest part of my made a lot of er money, but invested in it and my some in, i lost in during the 2007 and 2008 bush dministration when the stock market dropped from 14 to 7, i lost half. didn't know what to do, i panicked and took out what i had left trying to survive on it and
i'm 72 and working again. i don't -- is it the stock your 401(k)?ines if it is good, you do good, if it is not, you don't? like me, made a bad did, maybe i be i didn't, i made that money and put some on my house. work, making small wages and i'll be there the rest of my life. depending on stock market for benefits or gains over the years? talk about the risk there. i think that illustrates one of the challenges with a 401(k) plan. into ularly once you get the retirement phase or what xperts call decume population phase of your financial life. what do you do with that money? you leave it in the market, you know, you really some financial advice from someone to help you. other options, you could take
annuity, now a lot of some people don't like, because you are put nothing a lot of money and returns don't look really good. hand, it is guaranteed income strength remainder of your life or take gies one can do to out strategically certain amount of money each month. is the case where you need advice, you need assistance from either somebody who reputable person from the outside or employer.your host: from our line with those orking adults, paul -- sorry, raul in laredo, texas. hi. caller: good morning. to suggest maybe because social security maintaining -- once you pay up quarters, that's it, you can earn up to a million. change it andt to if you make a million dollars,
ontinue contributing to quarters regardless of the amount of quarters you may go over it, which is fine. has ther question is, why social security decided if you for school district and you did not contribute to social security, which i did for a bit of time, you are not llowed to get -- you are short changed, you will not get all your borders, you have paid them out. i want to find out why that happened. host: thanks, caller. a great question, caller. part, social security is facing serious financial challenges, by 2035, it will 75% of promised benefits to people. congress and the administration to have to act before then to shore up the financial social security. increasing the taxable wage
base, what you are suggesting, one option and a number of people in congress support proposals, that is one way to get money into more social security and bolster finances down the road. the other issue about what you referring to as government windfall fset and the elimination provision, these are somebody who re was not paying into the social of rity system for most their career, but then tries to get social security benefit like spousal benefit or spousal in fit, will see reduction that benefit and basically it is o correct for the fact one, they didn't pay into the system as long as for as many years as also to take but correct -- of the benefits. that is why some of that goes on, it's a very complicated
to , but basically done restore equity between people in 96% of security system, the workforce and those who were not. host: one line from the report this, in 2014, 34% of ouseholds, age 65 or older, received 90% of their income from social security in addition democratic shift associated with age of baby boom generation and expectancy have strained social security's finance. on t of people depending this program. guest: absolutely. social security accounts for 33% income received by people age 65 and over. host: so it should be ideally of not only social security, but what you save for yourself nd other meetings to save for retirement. guest: the three-legged stool, pension, private savings, your savings and social security. host: a lot of questions about the future of pensions and their does this report traesz those as far as pension
security for the plans depending stock mark etz and other things and if people grant them have the ability to make sure are sustainable? guest: we talked about 401(k) aans already, there are still lot of traditional pensions around the country. many of these right now are also facing serious financial stress. in particular, they are what multi employer plans, plans created by collective agreement, have lots of employers paying in. of plans, for a variety reasons, changes in industry, work force and so on, do not to pay full y benefits. and some of them, for example, 2024 are some pensions by or 2025, will be completely insoei solvent, result nothing retirees seeing ut the country reductions in their pensions and so this is going to be a real problem. again,ss is looking at it they try to address it a few
years ago, they are looking again right now. is a serious issue and addressed t will get in the next few years. host: let's go to mike in tennessee, hi. caller: yes. i work for about 10 years for a cookville. for about 10 years, i deposited of my income that i earned there, earned there, for 10 years into a 401(k). and i had to get rid of every penny of it in a spin down in -- you know -- insurance. and this obama care stuff, you
know know, back then i wouldn't have money.rid of that host: okay, caller, thanks. facing ne big challenge many retirees, older americans and oday with medicare healthcare shops, certainly for retirees under age 65, you know, serious illness even if you in the exchanges and have insurance, can be significant income, this certainly is a challenge that facing and the sleeper is long-term care. people get onger, into the high 80s and 90s, the long-term care hear retirement, you know, somehow, some situation, where you are continue to get services n your home or moving into a retiree home, there is only oing to be more demand for
this, very expensive and this is the challenge we are facing. host: gao makes several recommendations when it comes to retirement savings programs, niversal access to retirement savings is one of them. one of the ones you list, number options for rove spin down phase of retirement. why is that important? as the gentleman said earlier, when you get, even if figure out if you are able to invest wisely problems some market and you saved a bunch of money, you now retired, what do you to your money? have a couple hundred thousand authorize or more, what do you do? sure it lasts for remainder of your life? it is not obvious, most provide any sort of annuity option, don't provide say gram where you could take a -- get a monthly check out of your money and make it a amount to make sure it lasts until remainder of your l.
sum. simply give you a lump a lot of people, it can be very existing o pay off debt or to go on a long vacation, give money to th children, children don't realize may look like a lot of money, it in fact has to many ou for probably people another 20 or 30 years. hen you think that way, it is not as much, the challenge is who are u help people retired and get this money, how do you help them make sure it of their remainder life. late in life they are not poverty.up be nothing host: here is bill in chicago. go ahead. hi.er: any pension ty, plan in any land, whether it is or public pension.
never -- urity should 5% fee.ecurity income 10 month or less or 10% of total amount per month. must be repaid -- never can be given. okay, thanks. caller: yeah, i think that there used to be an option where i one could pay back social ecurity benefits later, you could start -- social security at age 65 and then pay the money back at age 70 and wind up getting higher benefit, but they few years ago, a congress, no longer are able to that regard.em in host: does the report address 401(k)s associated with and how much they should be charged and how you pay attention to those? guest: we do mention importance of fees. fees can be tremendous drag on
over career, compounding 30 years, higher lower n result in much account balances. regulationsthere are if you have a 401(k), plan ponsors have to provide information on the fees associated with each of the nvestment options if your plan offers. they also collect information providers on which are the most expensive, relative ost of different options and they can choose to minimize, offer you platform or portfolio options that are in fact low fee. here is -- there is some protection there for 401(k) plans. it's moreet to ira's, on retail market and less really more fees, disclosure, pretty much, you get perspective from somebody, from service provider and somewhere
perspective, they tell you fees, you have to do research on your own. cover know you don't capitol hill per se, but anything over the tax bill that affect retirees, when it comes to retirement savings? they were talking about reducing the contribution limits plans.(k) the contribution limit is their 18,000 for workers under age 50, goes up to $24,000 for people people over age 50. they were talking about lowering limits and then allowing contributions above be e that limit that would what they -- which would be post-tax dollars. they call rothification. you put pretax dollars in. individual retirement account, for example, you put post tax dollars in,
out, it is not t taxed. they were going to make changes there. that proposal rs has been dropped. there aren't any really going on in hings the tax bill regarding retirement at this time. missouri, s city, working adult, lisa, you are on with charles jeszeck. question is my this. why is it that when you go ahead apply for social security, they catch your -- cut earnings off and you have to go ahead and you have to try earnings make up the they cut off because you can't making that and social security amount higher. now, but iking right drew social security, they talk bout year cut off now, you can't keep contributing to ocial security to keep your wages high enough to get extra on your social security check in
the future. to know why isn't congress doing something about that? poor people ot of like me out here trying to work just ying to stay alive because we're 66 and may not have any income put away or that.ng like and why isn't social security or congress addressing people like me? host: okay, caller, thank you. guest: well, right now, i know a re have been in the past lot of proposals to reform social security and try to -- people talked about increasing minimum benefit, people talk about increasing work, gao, 've done on looking at proposals to help vulnerable eived by populations throughout the united states, low income people and women and other groups. so there are -- there is thinking on that. congress, at this time right now the congress is focusing on tax reform. how is social security calculated as far as how much
you get back or how much you get? guest: minimum amount to be eligible for social security quarters that you have paid social security taxes on, years, then when they do calculate social benefits, they look at your highest 35 years of earnings and they calculate off formula, here is calculate your average monthly and then they adjust it or inflation, i mean, it is somewhat of a complicated formula, but that is basically he way it comes out and once you receive your benefit, it's djusted each year according to increases in the cost of living. ost: 2%, they got 2% raise, cola raise. guest: yes. one thing to keep in mind, you benefit, the longer you're able to wait to claim, so, for example if you were get $1000 monthly
benefit at age 62, if you wait 70, the longest that you can wait, you would get $1750 a month. it is really quite a significant increase. of course, many people aren't able to wait. know, they have strenuous jobs or maybe worked in jobs, got n or other laid off and no prospect for them to get back. people can wait, they will get a significant benefits.n host: one more call, richard in missouri, hi there. caller: hi. turned ing, i'm -- just 80. .uest: congratulations caller: i have -- carpenter all pretty good uilt pension out of the deal. i paid into the pension fund, pension, ow i got my they didn't give it to me, i paid into it. and my wife, she's the person have the union job, too.
the cost ent pension, of social security, we don't buy own ars and i built my house and my father said nobody $35,000 house, but i got one. pretty good life, social security and medicare took care of us and i hope the generations look forward to something like that, too. caller.ank you, caller: i want to say, you're really lucky. ncreasingly today, those pensions, traditional pensions are disappearing, lots of no longer offer them, even in the union world, some under funded, so one of the challenges for younger people is they have to try o build a pension essentially, build retirement savings account through 401(k) plan, much different challenge. just as a -- to give anecdote,
my father was a police officer new york city, retired and ba -- for chase majority manhattan bank. checks in got two the mail and social security and could survive. retirement.fortable he really would -- it would have been difficult for him, he had a tree, would have been difficult to navigate the money, orld and save up so he was really lucky. increasingly for our children, and more have to take the responsibility of retirement savings on their >> c-span's washington journal, live, everyday with news and policy issues that impact you. caroline kitchener talks about how the presence and influence of political extremist groups have grown on the internet.
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