Date: 2008-06-24
Speaker: SAM JOHNSON (republican)
Chamber: H
State: Texas

Mr. Speaker. I yield myself such time as I may consume. Mr. Speaker. I rise in support of H. Res. 1294. to recognize the goals of National Save for Retirement Week. I am pleased to join my colleague from Pennsylvania. Representative ALLYSON SCHWARTZ. to again introduce a resolution in support of National Save for Retirement Week. The week is designated this year as October 1925. You know the best time for Americans to save is on payday. That is when they have got the cash. When employees save through their employerbased retirement plan.. the money comes out of their paycheck before other tempting priorities get in the way. Saving for numero uno ought to be every working Americans top priority before spending on optional things like dinner. movies. or. I hope today. still buying a shiny new car. Saving for retirement is not as flashy or fun as many competing priorities. but the only way most of us are ever going to be able to afford retirement in. the future is by saving today. This spring. the Employee Benefit Research Institute released its annual retirement confidence survey that shows Americans confidence in their ability to afford a comfortable retirement has dropped to its lowest level in several years. This drop in confidence represents Several concerns. but the big concerns I hear about are the overall state of the economy. the weak stock market and concern about ones own job security. The answer to these concerns. in my opinion. is to save in an employerbased retirement plan. The first reason is that- most employers match the employee contributions. If an employee puts 1 percent of earnings into a plan. many employers match that contribution dollar for dollar. That means the employee gets a 100 percent rate of return. Even if the market slides a little bit. the employee still comes out ahead because of the company match. Many employers match even more geperously. up to 4 or 6 percent of salary. When an employer is handing out free money. I encourage all employees to get in line and lets say "yes." A second reason to save at work is our economy is going to recover soon and employees can look at their current stock market purchases as buying low. The formal term for regular purchases in the stock market is dollar cost averaging. That means you purchase mutual funds or stocks at regular intervals. such as on payday. regardless of share price. Under dollar cost averaging. when the market prices are low. you end up buying more shares with a set amount. of money. and when market prices are- high you buy fewer shares with your set amount of dollars. Buy low. sell high. It works every time to build wealth. The third reason to participate in an employerbased retirement plan is that the sooner people save money. the sooner the most powerful force on Earth can work for them. the power of compound interest. With an average of 8 percent return. money doubles every 9 years. The cost of living in the future. even in retirement. is not going to go down. but money saved early in ones work life will make retirement easier. Another powerful force in saving is inertia. sometimes described as a body at rest stays at rest. or a body in motion stays in motion. Employers and Congress recognize that principles of inertia often means that employees never get around to affirmatively signing up for retirement plans at work. To address inertia. Congress passed a law to allow employers to automatically enroll employees in retirement plans and get those savings rolling forward with the power of compound interest. The amazing thing is we are now seeing roughly 90 percent employer participation in retirement plans with an automatic enrollment. up from previous levels of roughly 70 percent. I am glad to see this new law is working. Last year. after we enacted a similar resolution. I was happy to see reports about the number of employers that promoted National Save for Retirement Week. There were lots of employee benefit fairs. promotional enrollment meetings andseminars. and other employers printed up new brochures for employees to review regarding theimportance of retirement savings. I hope to work with more employers in my congressional district this year to bring the message of Save for Retirement Week to employees. Mr. Speaker. I know that Americans are strapped for cash and that right now saving is ahard thing to do. Rising gas prices are taking bigger and bigger bites out of everyones income. It is hard to set aside retirement money for years down the road. It feels like right now there is a lot of month left at the end of every paycheck. But Americans dont want to work forever. and the only way to retire is to plan and save. I would encourage everyone to go to the Web site choosetosave.org and use any of the calculators that help to plan for retirement. college savings. and budgeting in general. Planning is a great first step to financial security. Mr. Speaker. we know that Americans who have only Social Security as retirement income end up in poverty. As much as some of my colleagues hate. to admit it. Social Security has a serious funding problem in a relatively short time and we need to address the problem. We cant just tax our way out of that problem either. Part of the reason for our horrible national savings rate is that Americans are paying a whopping 15 percent of salary between their individual share and their employers share in payroll taxes. In 1984. when payroll taxes went up dramatically by 5 percent. the national savings rate fell by the same amount. Congress took those payroll taxes out of Americans pockets in order to fund Social Security and Medicare. with the. promise that the programs would always be there to pay benefits in the future. The problem is our programs face huge structural deficits. and Americans have not been saving. We need to change a lot of things. but the first thing we can do is get people to start saving. Americans need to save at work where they generally get a match from their employer and where the money goes down to their own retirement accounts before expenses get in the way. I look forward to working with employers and financial institutions in my Dallas and Collin County representation areas later this year to promote National Save for Retirement Week. which will happen the week of 19 October through 25 October. Mr. Speaker. I want to. thank ALLYSON for introducing this legislation. Mr. Speaker. I yield back the balance of my time.