Expect to live a much less during retirement. In 2013 that number had grown to nearly half of all adults. This trend is getting worse but not better. Young families are having more trouble than previous generations to save for retirement. While this problem is that most acute for all middle income families, there are some families who are suffering more than others from the Retirement Crisis and the expected shortfall. Particularly lowincome households are more likely to suffer than high income household. This is true for lowincome households who do not work for an employer who offers Retirement Benefits at work. So what can we do to tackle this problem . Federal and State Governments already offer substantial tax benefits to help people save for retirement. The federal government forgoes with a 100 billion each year tax revenue to incentivize people to save for retirement. States with income tax also encourage workers and their day to save for retirement. Even though federal and State Government are spending a lot of money for going tax revenue help people save for retirement, we are facing a growing Retirement Crisis. Part of the problem of the dichotomy of more Government Spending and less retirement saving is looking at the tax incentives we have are not welldesigned or are inefficient. High income earners get the biggest help from the existing incentives, then lower income families. So it is clear that we have to do more to help families save and tackle the Retirement Crisis. Part of the solution is to think about ways how we can reform the tax code and improve the existing standards to help those who need help most. Possible Solutions Solutions include expanding credits, simplifying savings and offering more ways to help people save for retirement outside their employer and employee rate relationship. We are fortunate to have two distinguished panels today to help us figure out what the data actually say. What are potential solutions and how we talk about the solutions in the crisis. The first panel theyll be will be moderated by profession or tracer, the director for economic policy, at the new school of new york. She will will lead and engage in discussion about the depth of the crisis, the second panel will be moderate who is the director of policy for the poverty to prosperity program. Shell focus on strategies to make it easier for households to say. Will be joined by carol, assistant secretary of policy wholl offer keynote remarks an obama administrations effort to address it. With that, let me welcome the first Panel Moderated by teresa. [applause]. Its wonderful to have you here with me. There are many questions i want to ask all three of you. Let me start with saying that we have a Retirement Crisis. Many people have focused on this idea that government may not be able to pay for all the elderly who will be of retirement age. A bigger problem, another way to think of the Retirement Crisis is that these folks will not have enough money when they get to retirement age. So, in your remarks i would like you to address what are the facts to help us understand how big the crisis might be . The second issue is also playing off what christian said, we spend a lot of money in the federal tax code and also at the state level that is invisible. It is indirect, it is in the form of past expenditures, money we dont collect because people get a deferral when they contribute to their qualified tax retirement account, and the contributions and investments that build them. So this indirect subsidy is a large, how large is it . What kinds of reforms . Not, what might happen but for years to hear, what policies would best help the people we just talked about get more savings and retirement adequacy . Ruby to want to start . Thank you so much for having me. Both you i am very glad to be here today. Both christian and you mentioned we are facing an ongoing Retirement Crisis of Retirement Security and people havent enough to spend in retirement that they can maintain their consumption level to some degree. Prior to retirement and particularly lowincome people can have a very basic level of income. This is a problem that is concentrating on low and middle income households, households of color, part of the solution is to increase the minimum benefits for Social Security which at this point is below the poverty line. Another huge piece of the puzzle is tax incentives for retirement. We estimate costs about 2 trillion over ten years. The tree says work says its 20 more if you include the state level attacks because states tend to piggyback on the federal rules of defining income. So i want to focus on three issues today related to this. The first is the fairness of the current incentives in terms of people who are participating in employer plans. The second is, how to increase access to employer pans. In the last one is to improve the effectiveness of the plans themselves. So on the first subject, john will discuss this and he is the author of research on the subject. The evidence is that our current Retirement Savings and incentives dont increase how much people save out of their own money for retirement. They do increase how much savings they have for retirement which may sound a little paradoxical. One way to think of it is, suppose i take him 50000 of income. If i would say 5000 for retirement without any savings incentive. Then you give me 1000 savings incentive. What the evidence is incentive. What the evidence is suggesting that basically that 1000 will go into increasing a 4o1k, to some degree, i blame most or all of it. I wont increase how much im saving. I will end up with 4000 in concepcion and 6000 and my 4o1k but not saving my own money. This is an important pack. It means that these incentives are not spurring people to say more. They are instead, sorta like the government is depositing the subsidy into your 401 k and possibly into your 4o1k and possibly a bit into your Checking Account as well. So i think we need to focus on the fairness of these incentives. Who savings we should be supplementing the most. My answer would be low and middle income households rather than the wealthy. But, in fact the current retirement incentive very disproportionally go to the wealthiest household. So they have again estimated that about two thirds go to the top, wheres only 7 go to the bottom 40 . If you look at the top 1 , they get 50 more of the benefit then that in tire middle kit quintile. So one way, and one of the main way is to shift to tax credits. You could completely replace the Current System on deductions, and taxing the money when it comes out, often many years later were taxing the money when it goes and as a roth model is. They are not taxed on the earnings at all. Those out all. Those proposed replacing the Current System. You could also shift more in this direction by cutting back on the tax incentives for the wealthy. Whether that is through reducing the contribution limits, Something Like the president s proposal to limit the value of lots of deductions and exclusions, including those exclusions, including those for Retirement Savings to 28 . A cap on the amount of tax preferred savings that you can have as an aggregate balance. Then moving some of that to make the sabres credit refundable and potentially expanded. You might even want to use some of that for deficit reduction or other priorities. Its an awful lot of money. An additional benefit i will mention is a refundable credit, it would enable you to structure the tax and saying that as a match match that is directly deposited into the account. There is evidence that this would increase the responsiveness. What is the framing. This is just the fact that lets say, lets a get a refund equal to 20 of my savings. I save a a dollar and i get 25 cents back. But i really put in 75 cents out of my own pocket to and up with a dollar my account. Instead of of the match you could have the same results and frame it as a 33 match. I put in a percent and the government would match 33 . Most people dont do that math in their head so 33 sounds bigger than 25 of the respond more. Also just the fact that it would go into the account in summary form ideas would eliminate some of the friction. So the second thing is expanding access. Right now about 130 people do not have access at all to a Retirement Plan. About half to not participate. The numbers are higher if youre lowwage, parttime, working for Small Business for about 60 of the bottom quartile to not have access. The fact of the matters People Matter is people really dont save for retirement if they are not covered by an employer plan. Very few people directly contribute to an ira. Even if you made the tax incentives more progressive you would be failing to cover or increase Retirement Savings among a lot of people who are not covered or participating in an employer plan. I think that is a very important aspect of Retirement Security that we need to focus more on. One way of coverage would be the automatic riaa proposal, the president has proposed his proposal would require businesses to have more than ten employees to offer a payroll deduction ira and would provide tax credits if they would do so including larger runs if they are auto enroll. While this idea was originally bipartisan, it has stymied by the fact that it has included the mandate and it brings up images of healthcare refined in the lives of republicans on the hill. Another approach is jons proposal which is substantially to increase the credit for employers offering plans, but not necessarily for penalty. In the meantime another important effort is to get states to be pioneers in this. If were not going to see these legislative proposals are enacted in the near future there are states that are wanting to create auto ira plans. The department of of labor is looking at guidance clarifying that they are allowed to do so. The final thing to touch on is cam design. This can can have a tremendous effect on coverage. A lot of people know that if you have auto enrollment, auto escalation and plans, you see a lot more participation, a lot more savings. Peoples behavior is a lot more influenced by how easy it is to save and the structure of saving that it is by these incentives. We have seen a shift towards auto enrollment since the pension protection act but theres more we can do for that. I think we could think about calibrating some of our incentives were getting employers to calibrate their defaults and adjusting the auto enrollment defaults based on income. So given the Social Security as the net progressive and lower wage workers would get a higher share of their income replaced. In an ideal world you would have different Savings Rates among different income groups. You could go in that direction. One other thing to think about longterm is how the savings are vested. One Important Development has been due in part of the auto enrollment we have seen investments and target date funds which automatically adjust your pro for the overtime to be less risky as you approach retirement. I think it would be great if we could begin to think about defaulting people on this would potentially require legislation or guidance to purchase long tear Care Insurance over time. If the goal is to ensure absurd level of Retirement Income and adjust healthcare in retirement, you would need less money saved to do that if you are purchasing longterm Care Insurance. The final, Important Mission that i have to mention is in reese back to how funds are investigated is the department of labors conflict of interest pool. This is addressing the very large problem for people who are losing about 17 billion per year due to receiving advice from their Financial Advisor that is not in their best interests because of conflicts of interest that these Financial Advisers are receiving. The proposal which still needs to be finalized would require Financial Advisers who receive these conflicting payments to provide advice that its in the best interest. I will stop stop there. Im taking up too much time. He talked about the lack of coverage of most privatesector workers, have given us some ideas of how to treat the design of people who have it, youre hoping that auto iras are covering people who dont have employer, and you talked about the big fault lines in the way people invest now. Most of the time asking experts for the advices of fault line. Im interested later on after we hear from john, what about the design we have in this country is that we allow lumpsum was drawls, we are seeing already this week what is happening in the uk. They have given that pension freedom to take out lump sums, it the design we have in this country is that we allow lumpsum was drawls, we are seeing already this week what is happening in the uk. They have given that pension freedom to take out lump sums, it is not good. Whether or not you think, youre not in politics anymore, whether not you think we should stop lumpsum withdrawals or withdrawals at all before retirement. So i would love to hear your response. John, how would you frame the problem is not being a people problem not a budget problem and how was you frame and have people point the way forward to fiopleng it with the money we already have on the table. Did you say it was 120. 2 trillion over ten. And then you add another 20 for the state. So every year that is overbud00. So if you sold the gun in the first act ill be shot in the second. So so the gun is 200 billion per year, can we use that better . Thank you so much for the organizers and for teresa for moderating this panel. Its a great pleasure to be here. You phrase it as a budgetary problem or people problem. The easiest way to see this as a deeper people problem is that i think if you substantially expanded the budget that we are putting forth on retirement incentives, the way theyre organized today you still wouldnt really go very far towards fixing the problem. I think that is because these tax incentives, and the Research Suggests most forms of the incentives whether their company matches or savors credit, or texted action, they just are not that effective in increasinenti savings. Thats for three reasons. First, i dont dont thing thisll come as a great surprise, most americans do not pay his great deal of attention to their savings policy. For instance a five and q double or have the eoplesting taxes system, i dont think most people would notice and literally not that they would not respond a little bit, i i think they would do nothing. Now, of course there would be some who respond so they pll give you the second problem with tax incentives which is it does not appear they actually increase the amount people are savinenti people. So why this might be true say your firm comes out and they pre going to give you this great match rate and you say this is fantastic im going to put more money into retirement, thand ts only the first step. You have to not only just deposit the money in the account to start with but you have to actually spend less on whatever else you are going to do that year, that turns, that turns out to be much harder. What we see is people do put a lot of money in retirement accounts when their offered incentives but essentialht for each dollar you put into the account you either save less and some other form or your Credit Card Debt goes out and it gets offset in a way that does not increase your savings and may make the problem worse. If for instance you are borrowing on a credit card that has a higher Interest Rate than your savinllo apenount. Nooub we said it reframes the tx incentives more as a lumpsum deposit that the government is making insert people savinllo account. I think you want to evaluate that on the basis of fset stess. Also on the basis of efficienc, what is that we are were trying to do by augmenting people savinllo. In addition to distributionat i conce sts the motivation for Government Support is that we think some people, on their own will not be able to save enoanih for retirement. So what that points to this we should be directing the subsidies which are effectiveht lumpsum stores the people who are least prepared for least able to save for retiremend. Epo structuring it as a match we are doing the opposite. First, were given the largest lumings m to people who are are already saving the mosd. Second the people who are saving, even if theyre saving less, the people who are saving are more likely to be aware, their understanding the problem, there thinking about retirement in a way that the people who really have the deepest problems out the ones who are not thinking about the prnot ylem at all. They havent started saving, not because not because they havent thought about it really hard these are people whogust havent thoanirse about it at all. Those are those that we have to help the mosd. How do we help us people . As mentioned there is increasing evidence that defaults, nudges, these other forms of increasing and encouraging participation is much more powerful. So first, take a default for instance it works on the people who are not paying attention. So now youre primarily going to affect the 85 of the people were not psetd attention as opposed to the 15 who are. Second, turns out that defaults when the increased contro evutin to retirement apenounts that actually do increase true savings. There are a few Different Reasons why that migrse be the case, in contrast to the tax incenti