Brookings: SECURE 2.0 Didn’t Go Far Enough

It’s been one year since the landmark SECURE 2.0 Act was passed into law.? What’s changed, and what still needs to improve to shore up America’s retirement system?

BenefitsPro recapped a recent Brookings Institution seminar where panelists looked back at what SECURE 2.0 has achieved in the past year and what still needs to be done to help more Americans attain the so-called “holy grail” of retirement security.? According to BenefitsPro, the Brookings panelists agreed that SECURE 2.0 was the “most extensive update in retirement law in the past 15 years.” However, the panelists were also unanimous in their opinions that there is still more work to be done.

The BenefitsPro article highlighted commentary from panelist David John, senior policy advisor at the AARP Public Policy Institute, who said that emergency savings programs were an encouraging development stemming from SECURE 2.0.? These programs’ purpose is to encourage people to set aside money for the future, but also be able to access it in case of emergencies.

The seminar was a follow-on to a paper from Brookings researchers, called “SECURE 2.0 and the Past and Future of the U.S. Retirement System, which examined the impact of SECURE 2.0 legislation.? The paper’s authors cited four areas for policymakers to focus on as they consider future retirement legislation to help create a more effective retirement system in America:

1. America’s aging population, which will “‘have significant effects on both retirement security and macroeconomic growth more broadly,’” the Brookings paper stated.? The authors suggested a combination of auto enrollment and 401(k) annuities and other retirement income products to address the country’s aging labor force and increase the over-65 demographic in America’s workforce.
2. The nation’s fiscal crisis, which may include unavoidable changes to Medicare and Social Security—two programs that comprise an outsized portion of America’s beleaguered federal budget.
3. Financial stress, which continues to plague the majority of Americans. “‘Trends in financial metrics like household debt, wealth accumulation, credit delinquency rates, foreclosures, and access to retirement savings accounts have important implications for retirement as well as overall financial wellbeing,’” the authors wrote in the Brookings paper.? Employees want help with their personal finances, and many are looking to their employers to offer financial wellness benefits.
4. Retirement inequality, which has to do with the income gap between racial and ethnic groups.? As Regina Jefferson, a Brookings panelist and law professor at Catholic University’s Columbus School of Law put it, America’s retirement system “‘gives more to those who have more and less to those who have less.’”

The report’s authors also recommended changes such as making auto IRAs available nationwide, expanding auto enrollment and escalation in employer-sponsored retirement plans, and implementing saver’s matches for low- and moderate-income workers to help close income, racial, gender, and ethnic gaps in the retirement system.? Despite these and other issues, Brookings researchers believe that progress can be made across political aisles and that America’s retirement system can change for the better.