MR. AKAKA–Mr. President, today, I am introducing the Education for Retirement Security Act of 2006, with my colleagues Senators Lautenberg, Stabenow, Sarbanes and Baucus. I thank our former colleague, Senator Corzine, for initiating this important financial and economic literacy bill, of which I had been an original cosponsor. This bill is a product of revisions suggested by the Jump$tart Coalition for Personal Financial Literacy and the American Savings and Education Council, as well as consultation with other community groups such as the National Association of Securities Dealers and National Council on Economic Education.
Americans are not saving enough for retirement. Longer life spans, combined with low savings and high consumer debt, are putting many mid-life and older Americans on the path to entering retirement years with a lower quality of life, delaying their retirement to catch up with inadequate savings, or becoming a significant financial burden on their loved ones. In 2005, only 42 percent of workers or their spouses calculated the amount they needed to save for retirement – a major decrease from 53 percent in 2000. Only about half of working Americans are covered by a pension plan.
Inadequacy of retirement nest eggs and other preparation for retirement will certainly impact the U.S. economy and government services, as we know that the number of older individuals in the U.S. is projected to more than double over the next 30 years, from 35 million to 75 million people. We will inevitably see serious increases in long-term care and other health costs.
Furthermore, individuals of questionable moral character are determined to erode older Americans’ lifetime savings through fraud or aggressive marketing tactics selling unnecessary products or those with exorbitant and hidden fees. The Federal Trade Commission Identity Theft Data Clearinghouse reported that incidents of identity theft targeting individuals age 60 and older increase from 1,821 victims in 2000 to a startling 21,084 victims in 2004. More people in the U.S. should have basic competency in money management to avoid becoming victims of financial fraud and abuse.
The Education for Retirement Security Act is intended to address both the lagging savings rate and increases in fraud and abuse by establishing a grant program to arm midlife and older individuals with critical information and knowledge. It would do this by authorizing a grant program similar in structure to one which has proven successful in the Excellence in Economic Education Act, which awards a grant to a national entity that provides subgrants to community organizations to carry out programs that enhance economic, financial, and retirement literacy, and reduce financial abuse and fraud among the target population. The national entity would evaluate subgrantees on the performance and effectiveness of their programs, identify best practices and programs for replication, and assess any behavioral change, including asset accumulation, made by program participants. The bill would also create a national training and technical assistance grant program toward creating and making available instructional materials and information promoting economic and financial education, and providing training and other related assistance to subgrantees.
Economic and financial education can lead individuals to avoid scams and bad decisions about investments, mortgages, and pension plans, and ensure that they have access to tools they need to make sound financial decisions and prepare adequately for retirement. The limited timeframe that midlife and older Americans have in which to assess the realities of their individual circumstances, recover from bad economic choices, and benefit from more informed financial practices, makes critical the type of education that this bill would support.
Mr. President, I thank my cosponsors for joining me in introducing this bill, and I urge other colleagues to support this legislation. I ask unanimous consent that the text of the bill be printed in the Record after my statement.
