September 16,2014

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Wyden Calls for Retirement Savings Policy that Works for America's Middle Class

Finance Chairman Says IRAs Should Not Be Used as Tax Shelter for Millionaires

WASHINGTON –Senate Finance Committee Chairman Ron Wyden, D-Ore., at a hearing today said the incentives for saving in the tax code are not getting to the people who need them most. Wyden also raised the issue of executives and millionaires storing massive amounts of money in IRAs as a misuse of the system and should be examined further.

“It is a fact of today’s economy that millions of Americans are unable to save. The Leave-it-to-Beaver ideal of a worker spending 40 years with one firm and retiring with a generous pension and a gold watch is sorely outdated,” Wyden said.  “Retirement policies need to keep up with the times and ensure they’re helping middle-class Americans prepare for retirement.”

Saving for retirement has become increasingly difficult for Americans, both due to the impact of the Great Recession and structural changes in the economy. Workers change jobs more frequently and there are more women and part-time employees in the workforce, which has created challenges that current policy does not adequately address.

Wyden also cited data recently released by the GAO on the number of taxpayers with IRA accounts that contain millions of dollars. According to the GAO, there are some 9,000 taxpayers with IRAs with more than $5 million, savings that would require several lifetimes for the typical American worker to save. Wyden said IRA accounts were not intended to be a tax shelter for the wealthy, but to help all Americans save for retirement. The GAO data is available here.

Witnesses at today’s hearing included John Bogle, founder and former CEO of Vanguard; Brian Reid, chief economist for the Investment Company Institute; Scott Betts, senior vice president of National Benefits Services; Dr. Brigitte Madrian, Aetna professor of public policy and corporate management at Harvard University; and Andrew Biggs, resident scholar at the American Enterprise Institute. Their testimony is available here. Ellen Schultz, investigative reporter and author of Retirement Heist, was unable to attend.

The full text of Wyden’s statement is available here.