Savings-education campaign set for summer launch

Nation's Business, Feb, 1998 by Stephen Blakely

A national campaign to promote private retirement savings will begin this year under a measure signed into law by President Clinton in November.

The so-called SAVER Act (for "Savings Are Vital to Everyone's Retirement") calls for a national summit on retirement savings to be convened this summer by president and congressional leaders, lowed by two more summits -- in 2001 and 2005.

The conferences, financed by government and private-sector participants, will try to increase public awareness of the kinds of retirement plans available, how they work, and why they are important.

In addition, the U.S. Department of Labor, as the lead agency for the program, will develop public-service announcements, educational materials, and an Internet site on retirement issues. Much of this is an extension of the agency's Retirement Savings Education Campaign, launched in 1995 in conjunction with the Treasury Department.

Underlying the bipartisan effort that produced the SAVER Act is the lack of retirement saving by baby boomers -- the 76 million Americans born between 1946 and 1964.

There are now just over 34 million Americans age 65 or over, according to the U.S. Census Bureau, but by 2030 there will be more than twice as many -- a projected 69.4 million. The 65-and-over segment now comprises about 13 percent of the population but will account for 20 percent by 2030, the bureau projects.

According to the 1997 Baby Boom Retirement Index, compiled by Merrill Lynch & Co. of New York City, baby boomers collectively were saving only 38.5 percent of the funds they will need to maintain a comfortable retirement. The annual Merrill Lynch survey, started in 1993, indicated that the post-world War II generation faced "a massive shortfall in saving for retirement."

Another survey, released last year by the Employee Benefits Research Institute, a Washington-based research group, found that three-quarters of the nation's workers had no idea how much money they would need to save for retirement.

Although 76 percent of the workers who were offered a 401(k) retirement-savings plan at work were taking advantage of the plan, less than half were contributing the maximum amount possible, the institute found.

Rep. Harris Fawell, R-Ill., the prime sponsor of the SAVER Act, warns that the nation faces "a ticking demographic time bomb that requires increased retirement savings."

Educating the public about the problem "is the first step in defusing that retirement time bomb," he adds.