5 months ago
By Diane King at the NYSE
Although the national savings rate has risen to near 4.5% of disposable personal income, Americans haven't been great at stock-piling for retirement or even a rainy day. For instance, take this statistic: roughly 40 percent of individuals over the age of 55 have less than $50,000 in savings, according to the Employee Benefit Research Institute. Given that life expectancy is 78 years, that's not much of a cushion. And about half the workforce don't have a workplace retirement plan.
To address the issue, the government is stepping in. In his weekly radio and Internet address, President Obama says the IRS is making changes to help people build up their savings. Some of the changes at hand include auto-enrollment in retirement plans and allowing tax filers to get their tax refund in 2010 via a U.S. savings bond - by ticking a box on their tax return. The administration is also making it simpler for companies to convert unused sick and vacation days into a 401K plan and making auto-enrollment easier.
Will the changes help? The U.S. government can't quantify how much this program individually will lift the savings rate, but it says it is simply focusing on those who do not save enough.
And the personal responsibility factor is big in this effort to lift the savings rate. The changes are voluntary - so taking advantage of these options rests with the employer or you, the employee.
KXTV/News10 and CNN
