1. society
2. work
3. retirement

EMBARGOED UNTIL 10:00 AM ET
TUESDAY, APRIL 21, 2015
Rep. Joseph Crowley
Speech on “Building Better Savings, Building Brighter Futures”
Tuesday, April 21, 2015
Center For American Progress Action Fund
Thank you, Neera Tanden, and thank you to the Center for American Progress Action Fund for
having me here today. I’ve been so proud to work with you all over the years on so many issues
to improve the lives of Americans. So I can think of no better place than here to start a muchneeded conversation about how to help American families save.
As Neera said, I am Congressman Joe Crowley. I serve as Vice Chair of the House Democratic
Caucus and I am from Queens, New York. The district I represent has been called the most
diverse community in America. It’s a community made up of people from every walk of life,
and it’s been the doorway into America for millions over many decades.
My constituents typify hardworking, middle-class Americans. They are police officers,
firefighters, teachers, healthcare professionals, and construction workers.
Many are recent immigrants. Many were, or will be, the first in their families to attend college.
All of them are working hard to make ends meet today, let alone save for tomorrow.
I know all of us here are focused on lifting people out of poverty and strengthening the middle
class – ensuring higher wages, keeping more money in families’ pockets, and pursuing fair tax
policies for hardworking Americans.
And CAP has been a leader in putting forward strong ideas to reduce income inequality and
support working families.
But, we need to go one step further. We need to tackle a challenge that’s threatening the financial
security of the middle class and those working to join it.
And that is the savings and retirement security crisis in America.
The word crisis is no exaggeration.
Overall, savings rates have dropped from nearly 14 percent in the 1970s to less than 6 percent
today. Nearly half of U.S. households do not have a savings plan. Less than a third have a
cushion to cover basic expenses for just three months, if a layoff or other emergency leads to loss
of income.
The status for retirement savings is even more dire.
One-third of workers, and nearly two-thirds of workers earning less than $35,000 a year, say
they’re not saving for retirement at all. Private-sector pensions are increasingly disappearing.
In 1980, the vast majority – over 80 percent – of workers were covered by traditional, “definedbenefit” pension plans. Today, a mere 18 percent of private-sector workers are covered. And
corporate consultants admit, they don’t expect that trend to change.
Even for those who are saving, the picture isn’t any rosier. The overall national median
retirement account in the U.S. has a balance of just $3,000.
We are seeing a new generation of Americans growing up with little or no savings to help them
climb the economic ladder or simply weather a difficult time.
For younger workers, they’re trying to save for their children to go to college. They’re trying to
buy a home, or build the emergency fund they will need if their car breaks down. Others are
wondering if they can afford to start their own business, or have the financial security to leave
their job for a better opportunity. Older Americans are looking at retirement and if they’ll
be able to support themselves and maintain a good quality of life without working.
We know that savings are the path for middle-class families to achieve the American Dream, yet
that dream is increasingly being put at risk.
But we can turn this around. We can put building a college savings account, a nest egg, a
retirement plan back in reach for millions of American families.
That’s why today I’m putting forward an action plan to help Americans build better savings to
build brighter futures.
My plan will make saving not just a priority, but a possibility. A promise.
We have to create a culture of saving by putting the ability to save back in the hands of
American families.
Too many Americans say that they want to save – they know they should save. But it’s not that
simple.
So let’s make it easy, let’s make it habitual, let’s make it second nature – and let’s make it
affordable – to start saving.
And that goes for every stage of life – building savings from a child’s first years, keeping it
going for working adults, and putting in place protections for older workers preparing to retire.
The time is now to advance smart, forward-looking ideas to encourage and ease the way to
saving.
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For the past century, Democrats have been at the forefront of putting forward big, bold ideas to
bring security and peace of mind to working families.
It was the Democratic Party that started Social Security, and it is the Democratic Party fighting
to protect it for generations to come, so that no senior should live in poverty.
It was the Democratic Party that established Medicare, and the Affordable Care Act, so that
health care costs wouldn’t continue to bankrupt American families.
It was the Democratic Party that created Head Start, and the GI Bill, and Pell Grants, so that a
college education wasn’t an unaffordable luxury for just the wealthy few.
And so it will be the Democratic Party that again leads the charge to address the looming savings
and retirement crisis.
My “Building Better Savings, Building Brighter Futures” plan will give working families the
tools to prepare for whatever the future may bring – whether that’s college in a few years,
a car repair tomorrow, or retirement down the road.
This plan starts at day one of a child’s life.
We need to make sure that saving is ingrained as a basic habit, and also to help families start
saving as early as possible to achieve the greatest success.
That’s why the very first prong of this plan is a measure I worked on last year with Congressman
Keith Ellison, to establish USAccounts – a savings plan for every American child.
It’s about giving kids, and their parents, the right start for a lifetime of saving.
Upon the birth of a child, a USAccount will be established in the child’s name, and the federal
government will contribute $500 in seed money. Parents can deposit up to $2,000 annually, posttax, into an account.
Now, I know that it may be hard for families to get started. So we include a matching increase in
the Child Tax Credit to reward contributions made, while also providing some funds that can be
used for future contributions.
Parents who contribute to their child’s account will receive a matching amount, up to $500 per
account, per year, as an increase in their refundable Child Tax Credit when they file their taxes.
That increase in the Child Tax Credit gives parents the money they need to keep adding funds.
I also know that for families at the lowest income levels, it can be discouraging not to see higher
gains, when all you can put away are small amounts. So for families earning below certain
income thresholds, the government will match their contributions another time, up to an
additional $500 per account, per year.
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Suddenly, you realize saving is a lot more possible when you see how far each USAccount
contribution can go.
That’s our goal: helping families with savings that start small, but grow big.
And when the child becomes an adult, they can use this money to pay for college. Or, the funds
can be rolled over to a Roth IRA, helping young adults with other important expenses, or to start
their long-term savings on the right foot.
And just like that, we’ve got a generation of adults who not only have savings accounts, but have
the experience and the routine to keep saving for the future.
We must also use this opportunity to not only help people save, but help them develop the
knowledge of how to save and how to make those savings work for them. The CFPB has done
great work in this area, in educating people about their finances and their financial rights, but we
must continue to empower consumers.
It’s time to teach everyone about the basics of saving, just as we teach math, science, and history.
The only way we can achieve that goal is if we dedicate greater resources to support financial
coaching, education, and awareness.
Many in the financial services industry have started working to encourage responsible money
management and support financial literacy, and I welcome these efforts. Now, I believe it is time
to elevate their efforts by engaging all stakeholders in a partnership that puts a new focus on
improving financial understanding among Americans.
I believe if we strengthen our investments in teaching the fundamentals of financial strategy,
both in school and out of school, we can help all Americans have a better understanding of
responsible financial practices.
That’s my hope with this whole plan – to help families build financial stability and security for
the years ahead by giving them the tools they need.
That’s why the next part of my plan focuses on how we can make saving easier for working
adults.
That’s certainly a time in a person’s life when savings become critical. Savings give people the
security to leave a job that isn’t working for them, or to weather a dramatic change in income,
like if a spouse loses a job. They give people the opportunity to save for a house or to open the
small business they’ve always dreamed of. And, they give people the reliability to address
emergency needs like car repairs or medical expenses.
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But, while many working adults say they recognize the importance of saving, they aren’t able to
benefit from traditional savings vehicles. They can’t afford to save enough to meet the minimum
contributions required by traditional IRA accounts. Or they’re too worried about fees and
fluctuations in the market that could threaten their limited savings.
That’s why I, like many of you, welcomed President Obama’s announcement to establish myRA
accounts as a new option for saving . This program was recently launched. Now it’s time to
make it permanent. We need myRA accounts to become more widespread and more widely used.
The myRA account fixes some of the most common concerns that people express with other
options. It will allow a worker to open an account with as little as twenty-five dollars, and gives
them the ability to make automatic payments of even just two dollars every pay period. There are
also no maintenance charges or fees associated with these accounts, meaning every dollar that is
invested will be returned – plus interest – to the account holder.
myRA also helps address one of the biggest saving deterrents out there by allowing access to
these funds for emergencies. Without taxes and penalties for withdrawing funds, these accounts
can act as an emergency rainy-day fund, as well as a future retirement account. And because
myRA will invest solely in U.S. savings bonds, there’s less risk of losing value in the market.
These are safe, stable, portable accounts that break down common barriers to saving.
Building savings becomes even more important as workers move toward their latter years and
begin to consider retirement.
So the third part of my plan would help ensure a more secure retirement for workers.
With the decline in employer-provided pensions, retirement security has become an evergrowing question mark for many Americans.
Every American should be able to retire with peace of mind, and enjoy their golden years after a
lifetime of work.
And I want them to know that they have at least some kind of pension – a strong asset that they
can further build upon with personal savings and Social Security benefits.
While many employers already offer retirement plans to their employees, too many workers find
themselves falling through the gaps. In many cases, they are not aware of their employerprovided plans or encouraged strongly enough to enroll. While in other cases, the employer may
not be offering a plan at all.
It’s time to reverse this trend and let workers know that they can count on a pension after years
of work.
It needs to be not only easier for workers to enroll in employer-offered pension plans, but easier
to see that pension grow.
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So, this third component of my plan will create federal accounts that are Secure, Accessible,
Valuable, Efficient Universal Pension Accounts, which we’ll refer to as “SAVE UPs”.
These universal pension accounts will work similar to the Thrift Savings Plan currently offered
to federal employees, with government oversight, private management, and a limited number of
low-fee index fund options.
At a business with 10 or more employees, the employer will directly contribute a set amount for
each employee into the employee’s SAVE UP account. Or, if they have an existing retirement
plan that qualifies, they can keep contributing to that.
To help with the cost of contributing to these plans, small employers can receive a tax credit
worth the value of contributions to 10 employee accounts. For a small business with fewer than
10 employees, while they’re not required to contribute, this tax credit will make it financially
possible for them to do so voluntarily.
These accounts will make a big difference to employees.
Even if the employer contributes just 50 cents per employee, per hour worked, an individual who
works full time for 45 years can expect to see $160,000 upon retirement.
That’s if the employee did nothing on their own, but this plan makes it impossibly easy for
workers to contribute to their own plans.
Aside from the employer contribution, once enrolled, employees will automatically begin
contributing 3% of their pre-tax income, which increases gradually over time. We know that
automatic enrollment dramatically increases participation, and it also sends a strong message
about the importance of saving.
If that same worker made their own contributions in addition to what the employer puts in, he or
she could see over $300,000 at retirement. A working couple, $600,000.
Plus, these accounts will have built in protections to cushion against dramatic losses, giving
some reassurance to workers nearing retirement.
When you add that to Social Security benefits, these workers will see a much more stable
retirement picture, and that’s good for everyone.
That’s good for America.
That also means we need to keep up the fight that Democrats have led so proudly – strengthening
and defending Social Security.
We need to stand up to the fear mongers who claim Social Security is going bankrupt and who
threaten dramatic changes. The truth is, with a large and growing surplus of over $2.8 trillion,
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Social Security will be able to pay out full benefits for years, and we will make sure it remains
this strong.
We also need to stand up against hurtful changes like moving to a chained CPI inflation measure,
and to protect against benefit cuts to the disability insurance program next year.
The equation for retirement security is Social Security plus pensions plus personal savings. That
equals a healthy retirement.
And that’s why we need to make sure all three are strong.
But as I’ve said, it’s not just about retirement security – financial security is a lifetime goal, and
one that I am committed to.
I’ve focused on three pillars of building a lifetime of savings – USAccounts from early
childhood to young adulthood, myRAs in the working years, and SAVE UP universal pension
accounts for a secure retirement.
At every step of the way, we make it easier for people to save, making it more likely that they
will save.
My goal is to give people the knowledge, the tools, the critical boost needed to make saving
achievable – so that the American Dream is achievable.
I want to tell hardworking families not just that everyone should save, but that everyone can
save.
We can do this. We can make a major difference in the way Americans look at their financial
future.
I look forward to making these ideas a reality, and I look forward to working with all of you to
make it happen.
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