Improving American Retirement Prospects Policy Solutions for the Financially Fragile

Executive Summary
Retirement prospects for US adults have significant room for improvement. We aim to improve
retirement prospects for those most at-risk for retirement insecurity, while improving the long-term
sustainability of our retirement system.
Top Takeaways
We address the following retirement policy issues.
1. Employer-sponsored plans are unobtainable for many Americans. Many employers
do not offer sponsored retirement plans, disadvantaging many Americans from saving
for retirement.
2. Private savings are unevenly distributed and regressively subsidized. Many Americans do not have subsidized retirement plans, and their tax benefits disproportionately
accrue to high-earners.
3. Social Security is currently on track for insolvency in nine years. If policymakers
fail to act, Social Security is on track to deliver a flat 21% benefit cut to retirees in 2033
and beyond.
4. Seniors’ costs of living could be lower. Housing is the most expensive cost for seniors
who are not homeowners.
To do so, we propose the following policy reforms.
1. Overhaul the current system of private retirement plans, replacing them with a
universal individual retirement account. This would universalize access to subsidized
retirement savings and distribute tax advantages more equitably.
2. Increase working-age immigration to stabilize US population ratios. The ratio of
workers to retirees is at an all-time low, meaning Social Security has more to pay out
and less to take in.
3. Adjust Social Security’s cost-of-living adjustments and tax base. By removing the
Average Wage Index (AWI) adjustment for benefits, and subjecting employer-sponsored
health insurance to the FICA tax, the OASDI trust fund could be stabilized without cutting
benefits directly, removing the link between work and benefits, or impairing economic
efficiency.
4. Expand subsidies for senior housing. This would promote downsizing, lowering housing costs, without forcing seniors to leave their communities.