For Immediate Release
Office of the Press Secretary
February 28, 2002
President Promotes Retirement Security Agenda
Remarks by the President at the 2002 National Summit on Retirement Savings
Capital Hilton Hotel
Washington, D.C.
THE PRESIDENT: Thank you all very much. I
appreciate that warm welcome. It's a pleasure to be here
with friends and those who are promoting an important cause, and that
is promoting the security and dignity of Americans who are in
retirement.
Americans can help secure their own future by
saving. Government must support policies that promote and
protect saving. And saving is the path to independence for
Americans in all phases of life, and we must encourage more Americans
to take that path.
I want to thank the Secretary of Labor, Elaine Chao, for helping
put on this conference, and I appreciate her
service. (Applause.) I appreciate the Director of
the Small Business Administration for being here -- Hector,
thank you for coming. (Applause.) It is good to
see at least one fellow Texan, Sam Johnson. I appreciate you
being here, Sammy, thank you for
coming. (Applause.) And I appreciate Bill Roth,
the former Senator from Delaware, for being here as
well. Thank you, Senator, for coming
today. (Applause.)
Just over a hundred years ago, at the turn of the last century, the
average life expectancy in America was only 47 years. Today,
that number has increased by three full decades. This
amazing advance in the health of Americans is also profoundly changing
our society. Americans who retire today may have
decades -- decades -- of
healthy life before them.
This is time to volunteer, making seniors one of the greatest
resources of compassion in America. This is time for family
to pass on values to grandchildren and to strengthen the bonds between
grandparents and family members. And, increasingly,
retirement is a time of new beginnings: a time to travel and
explore; a time to take up new hobbies; and a time to take up new
careers.
Some 80 percent of baby boomers -- I happen
to be one -- (laughter) -- say they
plan to work at least part-time in retirement. And smart employers
will be wise to use their experience, and their competence.
The choices seniors make in retirement should not be limited by
arbitrary dates, or obsolete stereotypes. Increasingly, the
choices of seniors will only be limited by two things: the
state of their health, and the state of their savings.
Because the nature of retirement is changing, the needs of
retirement are changing as well. Older Americans now require
a retirement nest egg large enough for decades of enjoyment and
ambition. As medicine increases the length of life, adequate
savings must increase the options we have on longer lives.
Saving is never easy; it's hard for some to do. But it's
always worthwhile. Particularly when you think about the
power of compounding interest. The power of compound
interest is one of the great advantages of American
citizens. And they must learn to use it. If a
worker starts saving just $20 a week at age 22, and earns a 5.5 percent
real interest rate on the investment, that adds up to a nest egg of
nearly $180,000 by age 65.
This summit was created by Congress to educate workers and citizens
about the power and rewards of saving, and I want to thank you for
participating. You've accomplished a great deal, but there's
much more to do.
Americans are saving too little -- often,
dangerously too little. The average 50-year-old in America has less
than $40,000 in personal financial wealth. The average
American retires with only enough savings to provide 60 percent of his
former annual income. This problem is especially acute for
women and minorities.
We must encourage for all our people the security and independence
provided by savings. I want America to be an ownership
society, a society where a life of work becomes a retirement of
independence.
Savings start as an individual responsibility, but government can
help by expanding the rewards of saving and by strengthening
protections for saving. Last year, the Congress passed, and
I proudly signed, powerful new incentives for retirement
savings. Many of you in this room were involved in that
effort and I want to thank you.
We relaxed the restrictions on how much workers can invest in their
individual retirement accounts and 401(k) plans. Last year's
tax relief plan allowed workers over the age of 50 to make overpayments
to their retirement plans. This is especially important for
women, who take time out of the labor force to stay at home with their
children.
We passed some important reforms to give workers more choices and
more rights. We created a new kind of 401(k), that allows
workers to pay their taxes now and make tax-free withdrawals when they
retire, just like the way the Roth IRA works. And we
required companies to vest their employees' retirement rights more
quickly. Your retirement money becomes yours faster now more
than ever.
And, finally, we made it easier to roll over retirement savings
from one account to another. We know that American workers
change jobs more frequently today than they used to. This
means that people are seeing opportunity, and they're seizing
it. But if workers are going to move, their retirement
savings need to move with them without unnecessary bureaucracy and
unnecessary paperwork.
Thanks to the 2001 tax relief program, our tax code is now
friendlier to saving than it has been in a long time. Not
only am I proud of cutting taxes, I'm proud of reforming the savings,
and I'm proud of the good work that Congress did on this matter.
But there's still more to do. Even when people are
saving enough, they need to feel more secure about the laws protecting
their savings. In recent months, we've seen how workers can
lose a lifetime's worth of savings if their company were to
fail. So my administration has proposed reforms to make sure
that the money Americans put away in their working years grows safely,
so it is available in their retirement years.
More than 40 million workers own 401(k) accounts totaling over $1.8
trillion in assets. Many of these assets have been
contributed by employers who match their workers' own
savings. We know that employers contribute more when they
have the option to give company stock as well as cash, and that option
ought to remain as positive for American workers. But a worker should
also have more freedom to choose how to invest their retirement
savings.
Companies that contribute stock to employee 401(k)s should not be
permitted to lock their employees into owning that stock for years and
years. My proposal will allow workers to sell company stock
and diversify into other investment options after three years in their
own company's plan. We need action to give workers the right
to put their savings -- to put their eggs in more than one
basket.
Another important reform addresses the issue of
blackouts, times when employees are not free to change or
access their retirement accounts. When companies black-out a
pension plan, they temporarily take away a worker's freedom to choose
for themselves. Workers should be given a 30-day notice
before any blackout period begins and company officers should not be
allowed to sell their own company stock when workers
cannot. (Applause.) What's fair on the top floor should be
fair on the shop floor. (Applause.)
To make good investment decisions, workers need sound advice and
timely information. Employers should be required to provide
updates on workers' retirement account values every three
months. And we should change current law to remove the
threat of lawsuits from employers who provide sound third-party
investment advice.
All these measures will help build faith in America's pension
system, and I urge Congress to act.
I want to thank Senators Tim Hutchison and Chuck Grassley, and
Representatives Boehner, Portman, and Cardin, for their bipartisan
efforts to put forward good, common-sense legislation that seeks to
achieve many of these pension reform principles. Every
American deserves to be an owner in the American Dream.
That dream includes a sound pension plan, and adequate private
savings. And it is ultimately completed by Social Security
reform. Some people like their Social Security exactly the
way it is, and they'll be able to keep it exactly the way it
is. But for younger workers who want to take advantage of
the power of compounding interest, we should allow for personal
retirement accounts. (Applause.)
Today, Social Security is not a personal savings
program. Retirees' benefits are paid directly from the taxes
paid each year by current workers. The average return on
Social Security is less than 2 percent. And in the long run, Social
Security can pay retirees less than 30 percent of what they earned
before retiring. And that's not good enough as we head into
the 21st century.
We can do better, and a lot of people know this. Someone
retiring today after 45 years of work would be entitled to a monthly
benefit of $1,128 a month from Social Security. If that same
retiree, if those Social Security taxes had been invested in the stock
market over the last 45 years, during the same period of time, that
person would now have a nest egg of $590,000, or income of more than
$3,700 a month.
Because there will be an expanding number of retirees for Social
Security to support in the future, we must apply the power of savings,
investing, and compound interest to the challenges of Social Security
by introducing personal retirement accounts into the
system. Americans would own these assets. After
all, it is their money. (Applause.) They would
see more retirement income, and that's necessary as people live longer
lives. And, as importantly, they would be able to pass these
accounts on to their children. (Applause.)
Franklin Roosevelt told the U.S. Congress in 1935 that his goals
for Social Security included providing a secure retirement to American
workers and making sure all Americans could build their personal
wealth. We must dedicate ourselves to both those goals.
At a time when older Americans have longer lives and more options
than ever before, we need to ensure they have access not just to a
monthly check, but to personal
wealth. (Applause.) And I mean all
Americans -- not just a few, but all Americans, especially
women and minorities who are often short-changed by the current Social
Security system.
Robert Johnson, the CEO of Black Entertainment Television, explains
it this way. "African Americans die earlier, therefore
receiving less in the form of Social Security pay-outs. One
of the ways to address this is through the use of wealth-generating
private accounts that form part of an estate opportunity for African
Americans."
And Lea Abdnor, a member of the President's Commission to
strengthen Social Security -- as was Mr.
Johnson -- said, "I believe very strongly that we
have to give women the opportunity to create ownership and wealth for
the first time." (Applause.) And I couldn't agree
more. (Applause.)
My administration is working to expand growth and opportunity in
our economy. That's why we cut the
taxes. (Applause.) And we've got to make sure the
opportunity is available as a result of people being able to own
something, own their own money so they can manage it themselves, own
their own portfolio, have the capacity to generate
wealth. The generation of wealth should not be limited to a
few in our society; it ought to be an opportunity for
everybody. There's nothing better than providing the
incentive to say this is my asset base, I own it, I will live on it in
retirement, and I will then pass it on to somebody in my own family.
If you own something in America, you own a stake in America's
future, and a good retirement vision, a good retirement future says
that we must reform Social Security, not only for the good of the
system but, as importantly, for the good of American workers who work
all their life so that they can have an asset base to call their
own. (Applause.)
So as you continue to meet, I hope that you will think not only
about the short term issues we face, but how best to make sure that the
retirement promises are kept. And how to make sure that as
we come up with new systems and new structures that we fundamentally
change America for the better, that we make the system open and that
opportunity extends its reach throughout every
neighborhood. It is such a wonderful opportunity for the
country, and I hope you join me in seizing it.
I want to thank you for giving me the chance to come
by. Elaine is right, I do worry about the security of the
American people; I worry about the security of those who
retire. And I want you to know every day I'm worried about
the homeland security, too. Every day we wake
up -- I wake up and go into the beautiful Oval
Office and read about threats to the United States. And it
reminds me that the security of this country is my most important job.
And I want to assure you all that our administration is doing
everything that we possibly can to make sure innocent Americans do not
lose their lives here at home. We're running down every
lead, we're following every hint, every suggestion, every opportunity
to chase down some possible clue of an
attack -- we are doing it. And I'm
proud of our law enforcement officers at the federal, state and local
level for their diligence.
But I also want to remind you that in order to make sure the
homeland is as secure as it can possibly be for our children and
grandchildren, that we must hunt down the killers and would-be killers,
terrorists, al Qaeda terrorists and bring them to
justice. This is going to require more time than people may
want. It's going to require a patient and determined
nation.
But having traveled around the country some, having had a chance to
listen to the American people, I'm proud of the fact that our nation is
patient and is determined. Because our nation understands
that we fight for freedom, and any time our freedom is challenged, we
stand strong in the face of those who would take away our freedom.
Our military is making great strides, I'm proud of the U.S.
military. And as fellow Americans, I will assure you that so long as
I'm the President, I will do whatever it takes to protect the American
people.
I want to thank you for letting me come by. May God
bless you all. (Applause.)