Remarks to the national summit on retirement savings

Weekly Compilation of Presidential Documents, March 4, 2002

February 28, 2002

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. I appreciate the Director of the Small Business Administration for being here; Hector, thank you for coming. It is good to see at least one fellow Texan, Sam Johnson. I appreciate you being here, Sammy; thank you for coming. And I appreciate Bill Roth, the former Senator from Delaware, for being here, as well. Thank you, Senator, for coming today.

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.