In another classic example of being out of touch with what is truly happening to American workers, US Senate Republicans have introduced a new bill: the Addressing Missed-savings Opportunities for Retirement due to an Epidemic Act (AMORE) Act. Senators Ted Cruz, R-TX, Thom Tillis, R-NC, David Perdue, R-GA, and Kelly Loeffler, R-GA proposed this legislation, which calls for make-up contributions for individuals who weren’t able to contribute to their plans (401(k), 403(b), IRAs, etc.) in 2020.
But, just how many people do they think this will help? According to a Vanguard study from 2017, only 13% of their participants maxed out contributions that year, while a similar Fidelity study revealed that 9.1% of their participants hit maximum thresholds. Furthermore, those that weren’t likely to contribute were part of the roughly 50 million Americans who have filed for initial jobless benefits so far in 2020. If they presently aren’t among the 17 million or so still struggling to find a job, do you really think that they will have enough disposable income to make catch-up contributions?
According to Federal Reserve Chairman Jay Powell, if you were an American worker earning $40,000 or less you had a 40% chance of losing your job this year. Yes, 40% – outrageous! This cohort was clearly struggling to cover basic living expenses; so thinking that they were making regular contributions into a retirement account is a pipe dream. Oh, and the Vanguard study that I mentioned above, they expanded on the characteristics of the 13% that were fortunate to max out contributions, and not surprisingly, these participants were older, made more money, and were longer-tenured in their jobs. What a shock!
So instead of addressing truly critical needs such as pension reform, enhanced unemployment benefits, education, and worker protections during the age of Covid-19, we get another example of our “leadership” being totally out of touch with what our workforce is dealing with on a day-to-day basis. It is well beyond the time that we finally begin to elect representatives that can relate to the struggles that MOST Americans are facing and stop electing individuals who only reside in ivory towers.