| | | | How employer-sponsored rainy day savings accounts can help workers prepare for emergencies Thursday, October 26, 2017, 10:30 a.m. – 12:00 p.m.
The Brookings Institution, Falk Auditorium, 1775 Massachusetts Avenue, N.W.
Washington, DC 20036 | | | | | | | Many Americans live paycheck to paycheck, carry credit card debt, and have little or no money set aside for emergencies such as sickness, car or home repairs, job loss, or economic downturns. One consequence of this financial vulnerability is that many individuals use a portion of their retirement savings during their working years. Research suggests that for every $1 that flows into 401(k)s and similar accounts, between 30¢ and 40¢ leaks out before retirement. Helping American households build up their emergency savings would increase their financial security today and in retirement, and one innovative policy idea for doing that is an employer-sponsored rainy day savings account.
On October 26, the Retirement Security Project at Brookings will host a discussion on the practical considerations and challenges of helping households accumulate rainy day savings for use during their working years. The event will feature a presentation of forthcoming research by David John and Brigitte Madrian on the possibility of using employer-sponsored rainy day savings accounts to help workers prepare for an emergency. Following a presentation of the research, a panel of experts reflect on these options and next steps for policymakers and employers. The speakers will take questions from the audience.
Join the conversation on Twitter using #RainyDaySavings. | | | Presentation of research David C. John, Deputy Director, Retirement Security Project
Brigitte C. Madrian, Aetna Professor of Public Policy and Corporate Management, Harvard Kennedy School; Research Associate, National Bureau of Economic Research Panel discussion Moderator: William G. Gale, Arjay and Frances Fearing Miller Chair in Federal Economic Policy and Director, Retirement Security Project, The Brookings Institution
Diane Garnick, Chief Income Strategist, TIAA
David C. John, Deputy Director, Retirement Security Project
Brigitte C. Madrian, Aetna Professor of Public Policy and Corporate Management, Harvard Kennedy School; Research Associate, National Bureau of Economic Research
David Newville, Director, Federal Policy, Prosperity Now | | | | | |
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1 comment:
"Helping American households build up their emergency savings would increase their financial security today and in retirement, and one innovative policy idea for doing that is an employer-sponsored rainy day savings account."
Decades ago, this was not a problem. Credit cards did not exist. People paid for what they could afford. Then as we progressed as a society government enacted programs to make life "easier" and more "secure." In many ways this created the myth that government was there to take care of us. Social Security was the first of many such programs. To pay for this, they started with a small tax which people accepted. As Robert Ball, commissioner of SS wrote in his book, the tax started much lower than actuarially required to gain acceptance for the program by the people. In simple terms, a scam.
Then they started Social Security Disability again with a lower than required tax rate. Medicare started in 1966 with the very same basic low taxes with high expectations and huge unfunded liabilities.
The problem is that we have two types of federal taxes that workers pay: payroll taxes and Federal income taxes out of their paychecks. The vast majority of workers pay more in payroll taxes than federal income taxes. Yet the taxes that get cut are Federal Income Taxes while payroll taxes keep rising.
So when payroll taxes rise and workers live paycheck to paycheck at an increasing rate what do these so called experts think is the cause for lack of a rainy day fund or low savings rates or cashing in 401K's before retirement?
If you take a high rate of the very first dollar and it continues to increase, what do people do? They use credit cards or paycheck loans which cost them even more.
What would happen to a worker's paycheck if the payroll tax were eliminated? Would more people save, pay down debt and create rainy day funds?
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