BRIEFING NOTE 5
BRIEFINGNOTE FOR THE MINISTER: REPORT ON THE STATE OF RETIREMENT SAVINGS INTHE COUNTRY.
Thepurpose of this note is to brief the Minister of the statements madeby the President regarding the current retirement situation status inthe country. The President wishes to have strong regulation onbrokers who put their own interest first instead of their clients,the statement is crucial to the Department of Labor and the Ministermay receive questions from the press about the issue.
Thecouncil of Economic Advisers estimate that about 40 million Americanfamilies have a retirement account and the total amount of householdsavings in America is worth $7 trillion. However, American familiesstand to lose out more than $17 billion each year due to low annualreturns as a result of obtaining bad financial advice (Davis,2015).This news comes in the backdrop of the nation’s improving economywhere at least 18% of the American workers believe they can retirecomfortably which is 5% up from 2013 where only 13% of the Americanworkers believed they could retire comfortably. It is anticipated themedia will focus on three findings of the report:
36% of the working population in the U.S have a $1,000 or less set aside as savings for retirement.
45% of the U.S working population has no retirement plan.
People between the 55 and 64 age-bracket the average retirement per household was only $12,000.
Americans have a poor history of saving. The average income from social security in the country is $1,300 and this accounts for more than 90% of the America’s population income while in retirement. As far a retirement accounts are concerned, withdrawals should be limited to only 4% of the retirement amount per year (Mears, 2014).
Thethere are no uniform rules when it comes to retirement advise andthat most American end up losing money as a result of getting badadvice from financial advisers. Financial advisers earn someincentives in the form of commissions from advising their clients toput their money in high fees and low return retirement funds. Thismeans that the clients end losing money because of the adviser’sselfish interests and the economy as a whole ends up suffering. TheObama administration is highly concerned about this trend and isdetermined to streamline the financial sector especially in theretirement area in order to stop the working population from hurting.
Accordingto the report, this accord should:
Have some grounds on retirement investments as far as savings are concerned. The government is working on a framework on the standard for retirements savings
Ensure that financial institutions disclose to their customers the respective rates for their investment savings
Ensure that the customers are protected by the law from rogue investment financial institutions and brokers and the perpetrators are punished.
Davis,J. (2015, February 23). ObamaSeeks New Protections for Retirement Savings in Speech to AARP.Retrieved March 7, 2015, from The New York Times:http://www.nytimes.com/2015/02/24/us/with-congress-stalled-obama-seeks-governors-help-to-aid-middle-class.html?_r=0
Mears,T. (2014, October 14). HowSeriously Should You Take Retirement Savings Calculators?Retrieved March 8, 2015, from U.S News:http://money.usnews.com/money/personal-finance/articles/2014/10/31/how-seriously-should-you-take-retirement-savings-calculators