Open Letter: The U.S. Department of Labor Should Protect Those on the Path to Economic Security by Implementing the Fiduciary Rule
Tuesday, April 25, 2017
More than one third of
Hoosier families struggle to bring in enough income to meet their basic needs – food, rent, health care,
transportation, and child care - without public or private assistance. For
those who cross the threshold into self-sufficiency, one of the next major
steps toward long-term economic security is saving for retirement. Retiring
with dignity and security is a dream most Hoosiers share, and adequate personal
savings is currently the only reliable pathway to keep families from spending
their golden years worried about their finances. Sadly, the U.S. Department of
Labor is currently taking steps to make it even harder to build a sufficient
nest egg.
Although there are some
social safety nets (e.g. Social Security, Medicare) that are designed to
prevent seniors from living in or near poverty, they are often inadequate.
Today, more than one in six Hoosiers age 65+ lives well below self-sufficiency
(with income at 150% of federal poverty or less). Accordingly, in On the Road: Exploring Economic Security Pathways in Indiana, coauthored by Dr. Diana Pearce and the Indiana
Institute for Working Families, we advise that “the sooner [families] are able
to begin saving for retirement, the better.” As illustrated in the report, a
single adult in Tippecanoe County who starts saving at age 25 may only need to
set aside $203/month to be financially secure in retirement, while that same
adult will need to tuck away $757/month if she waits until age 55 to begin
saving. To check the data for your age range & county, see Table 8 in the report.
Unfortunately for those
Hoosiers who reach this step in the economic security pathway, the Department
of Labor is proposing to delay and possibly overturn the fiduciary rule, which
would require that all financial professionals provide advice that is in
best interests of savers. Without this rule, advisers are allowed to put their
financial interests ahead of their clients’, leaving Hoosiers and other
Americans vulnerable to advice that puts more of their hard-earned dollars in
the pockets of financial professionals instead of their IRAs. The rule was set
to take effect this month and projected to save Americans $17 billion a year.
That’s billion with a B.
“Hoosiers who are striving
toward long-term economic security need this kind of protection now more than
ever,” said Erin Macey, policy analyst at Indiana Institute for Working
Families. “Fewer
people have pensions, so more Hoosiers must manage their retirement savings
on their own. Those who turn to professionals to help them navigate the complex
world of investing should feel confident that they are getting the best
counseling possible. It is distressing to think that the advice Hoosiers are
paying for may not be in their best interests.”
For Hoosiers striving toward
a dignified retirement at the end of their working life, the fiduciary rule is
a small but important guard rail on the pathway to economic security. The
Indiana Institute for Working Families joins the many other organizations
calling on the U.S. Department of Labor to move forward with implementation of
the rule.
