Retirement Crisis: Will This New Proposal Solve It?

Millions of Americans have nothing saved for retirement. Is this the solution?

Apr 12, 2014 at 9:05AM

Many see the lack of retirement savings among the American population as a retirement crisis waiting to happen, as workers age without the financial safety-net they need after they stop working. But one proposal is aiming to fix this by using a model similar to what some other countries use.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at a proposal to have employers contribute $0.50 per hour to a private universal retirement account. Dan cites proponents' figures that this would generate $1,000 per year in retirement savings, which could build to $160,000 over a 45-year career based on past returns. Dan points out that this is similar to Australia's superannuation scheme, which requires employers to contribute 9.25% to retirement accounts on behalf of their workers. Yet opponents argue that even though these savings are automatic, they could pressure wages downward and make life even harder for the low-income workers that the measure is meant to help.

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Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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