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How Can Retirement Security Be Strengthened? Our Neighbors To The North Have An Idea
Expanding Social Security is an idea that has been increasingly bandied about by elected officials during the last few years. But how realistic is such a policy plan?
Well, one only needs to look to Canada to figure out what this country can do to improve retirement security. In June, Canada’s federal and provincial governments agreed to expand the Canadian Pension Plan. While all the details are still being worked out, it is expected it will boost the income replacement rate from a quarter to a third by raising the cap on replaceable income from $54,900 to $82,700 annually.
Given the dire state of retirement savings for many Americans – especially the working poor – some are saying it is a proposal the U.S. should take to heart.
Jared Bernstein, the former chief economist and economic adviser to Vice President Joe Biden, told the American Prospect:
It’s a model we should follow. I think the growth of retirement insecurity is even more serious here than it is up there.
Thus far, much of the American proposals to expand Social Security seem to be tinkering along the edges. Some, for example, have proposed limiting the cut that comes to the surviving spouse of a retiree couple when the other one dies. Others, upset about the lack of a cost-of-living adjustment this past year, proposed a one-time payment of $581 to cover cost hikes.
Those ideas, while a good start, are not a solution that is going to ensure seniors can live out their golden years with respect and dignity. It starts with ending the cap on salaries that shield the most wealthy Americans from paying their fair share. Why should millionaires be spared from contributing the same share of their salaries to the nation’s retirement? It makes no sense.
Retirement should not be such a struggle. Social Security is a part of it; pensions are a part of it; plans like a 401(k) or an individual retirement account are a part of it as well. But given the state of retirement savings, Social Security needs to be the backbone of U.S. nest eggs.