Social Security payroll tax revenues are expected to be exceeded by program expenditures beginning in 2013. By 2032, the Social Security trust funds will be depleted. The challenge facing working Americans today is to ensure that they prepare adequately for their financial needs in retirement in addition to what Social Security will provide. To ensure that individuals have sufficient savings to support themselves in their retirement years, much of this savings will need to come from individual savings and employer-sponsored plans. The Cost of Complexity Confusing rules make it less likely that individuals will participate in retirement programs and more costly for employers to offer retirement plans.
History proves that saving incentives work best if the rules are simple and consistent .
The 1986 changes introduced a level of complexity into an otherwise simple and successful program that was inconsistent with the critical goal of promoting long-term savings. Today, the IRS needs 70 pages of explanations, examples, and worksheets to try to explain who is eligible. The traditional IRA and the new Roth IRA are excellent ways for Americans of all income levels to save. Similarly, the formation of new employer-sponsored savings plans should be encouraged by simplifying the layers of overlapping rules and limitations imposed under current law. These rules have unnecessarily limited the ability of individuals to save through payroll deductions.