Miller Releases GAO Report Assessing Alternatives to Improve Retirement Spend-Down Options
WASHINGTON—Rep. George Miller (D-Calif.), senior Democrat on the House Education and the Workforce Committee, released the following statement regarding today’s publication of a GAO report that examines strategies to help American workers make sound financial decisions throughout retirement. Recent research has found that Americans are primarily saving for retirement through 401(k) plans, but 35 percent of all Americans—including 70 percent of lower-income households—may outlive their retirement savings. This risk is heightened because most 401(k) plans in the United States only allow for a lump sum distribution, rather than offering programmed withdrawal or annuity options. The GAO report examines the mix of retirement spend-down options offered in six other countries in order to identify lessons for the American system.
“Every American deserves a secure retirement after a lifetime of hard work. That is a promise of the American dream. However, people all across this country are finding it increasingly difficult to save enough money for their retirement and access it in a fiscally sound way,” said Rep. Miller. “When they reach retirement age, workers regularly face complicated financial decisions that can affect them for the rest of their lives. This includes how best to access any money they have set aside in a 401(k). Just as there is no one-size-fits-all means of saving, there is no one ideal means of spending those savings. Retirees must have clear guidance on their options for spending down any retirement savings in order to figure out what works best for their needs. The insight provided in this report can help regulators better provide hard-working Americans with the tools they need to live comfortably during retirement.”
To help regulators and the public understand the potential implications of various spend-down options, GAO developed an interactive retirement calculator, which generates a chart showing the retirement income that an individual would receive based on a number of variables, including age at retirement, 401(k) balance at retirement, interest rates, and investment returns. The calculator can be downloaded here via Excel or Open Office.
Rep. Miller has made strengthening 401(k)s and other retirement plans a high priority. Committee Democrats’ efforts to help Americans enjoy a secure retirement have included: exposing excess fees that Wall Street middle men take from workers' accounts, bringing young and low-wage workers into the system through automatic enrollment, ensuring that retirement accounts have diversified investment options with low fees, and more.
Read more about committee Democrats efforts at promoting retirement security for all Americans by clicking here.
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