Obama seeks reforms in retirement funds

On Saturday, in his weekly presidential address, President Obama spoke about working America and the future of retirement.

All have a valid right to worry about their futures and retirement as we watch parents and older generations struggle in the current economy. While some are pushing back retirement, others are wondering if they will be able to retire at all.

Given the current state of things and the fact that many students will be entering the workforce in the next few years, the changes that were stated in the address will come to affect almost all Americans.

As stated in Obama's address, half of America's workforce doesn't have access to a retirement plan at their work and fewer than 10 percent of those in that half have one outside of work.

In the last two years, about $2 trillion in retirement savings have been lost.

"We cannot continue on this course … and we can't go back to an economy based on inflated profits and maxed-out credit cards," Obama stated, after delivering the troubling numbers.

Reasoned by those figures, most of the changes to retirement saving that Obama mentioned in his address centered on making retirement plans more accessible and the process of participating in them easier to understand.

The first change that Obama focused on in the address was for automatic enrollment into 401(k)s or individual retirement accounts. Specifically, he focused on the need to make this sort of program accessible to small businesses and their employees, thereby potentially decreasing the 50 percent of working Americans who currently don't have access to such programs. ?

Under this system, employees are enrolled into the plan when they begin employment and would need to inform their employer if they do not want to take part in it. Such programs make it easy for employees to save for retirement by making the process less confusing. Furthermore, Obama's changes include "making it easier for people to save their federal tax refunds."

Currently, for those that have retirement accounts, there is the option to deposit their tax refunds directly into that account. Under the new changes, it will be easier for those without retirement accounts to choose a savings option for their tax refunds as well. As stated in the address, individuals wanting to save their refunds will be able to check a box on their tax returns stating they would like to receive their refund as a savings bond.

The third and final change that Obama spoke about in his address was to allow for employees to "put payments for unused vacation and sick days into their retirement plans if they wish." The culmination of all these changes will make saving for the future easier and more accessible to individuals.

For students about to enter the workforce, such changes have the potential to seriously impact our lives and the security of our future. Therefore, while many of these changes ease the way into retirement savings for individuals, the ease of such programs may also make it easy to forget the importance of knowing and evaluating where our money is going and securing that it will be there when we need it.

In what will be a helpful asset to students entering the workforce and those already in it, Obama stated, "The IRS and The Treasury Department are creating a plain English, easy-to-follow guide, as well as a Web site, to help folks navigate what are often very complicated waters." Such a guide would make saving easier for the many that are often discouraged and confused by the potential puzzle of retirement planning.

This writer can be contacted at news@theeastcarolinian.com.