Saving For A Lifetime: Advancing Generational Prosperity

Secretary of Labor - Washington

To: President Bush, the Speaker and Minority Leader of the U.S. House of Representatives, the Majority and Minority Leaders of the Senate, and Chief Executive Officers of the States

I submit to you this report on the 2002 National Summit on Retirement Savings.

The Summit was held from February 27-March 1, 2002 in Washington, D.C. The Summit successfully promoted the importance of saving for the future for every American.

The Summit brought together 250 statutory and appointed delegates as a bipartisan group with diverse expertise. The delegates represented state and local governments, professionals and other individuals working in the fields of employee benefits and retirement savings, private sector institutions, employers, the general public and members of Congress. The common goal of the Summit delegates was to seek ways to help all Americans retire with security and dignity.

The theme of the Summit was “Saving for a Lifetime: Advancing Generational Prosperity.” The Summit delegates participated in breakout sessions focusing on four specific generational groups: the Millennial Generation (individuals born from 1982 to present day), Generation X (1961-1981), the Baby Boom Generation (1943-1960) and the Silent Generation (1925-1942). The delegates were challenged to develop action plans with compelling messages, approaches, and potential partners for implementing the action steps.

In order to help Americans understand the importance of saving for retirement, we need to get the message out. To do this, we must understand the personalities of the different generations, their attitudes toward finances, and how they view and learn about retirement. It is essential that we understand these factors to communicate with them effectively.

The delegates developed some important action steps at the Summit. It is now a challenge to all of us to keep the passion for these issues and to share that passion in order to change Americans’ attitudes toward retirement savings. The issue of retirement security is foremost in all of our minds today. Advancing Americans’ awareness and understanding of the importance of saving is one way to increase retirement security. I hope you find that the Summit report provides you with the passion to continue this work as it has those of us at the Department.  I look forward to continuing working with you on these critical issues.

Sincerely,
Elaine L. Chao

The 2002 SAVER Summit Challenge - To Educate, to Persuade

Congress enacted the Savings Are Vital to Everyone’s Retirement Act of 1997 (SAVER Act) to advance the public’s knowledge and understanding of the importance of retirement savings. The act requires the Secretary of Labor (DOL) to maintain a public outreach program and hold three bipartisan national retirement savings summits. This report highlights the work of the second Summit, held in Washington, D.C. February 27 through March 1, 2002 at the Capital Hilton. The agenda is provided as Appendix A.

President George W. Bush, House Speaker Dennis Hastert, House Minority Leader Richard Gephardt, Senate Majority Leader Thomas Daschle and Senate Minority Leader Trent Lott were co-hosts of the 2002 National Summit on Retirement Savings.

Throughout the planning for the Summit, the Department relied heavily on the International Foundation of Employee Benefit Plans. Its expertise in employee benefit plan issues was instrumental in the development of the vision and agenda for the Summit and their experience in meeting logistics was vital to the smooth execution of all of the Summit events. In addition, the International Foundation cultivated the participation of many private sponsors (see Appendix D) whose generosity made the Summit events more enjoyable for the delegates to discuss and learn about retirement savings issues.

Approximately 250 statutory and appointed delegates participated. The statutory delegates included the Congressional leadership and the executive branch officials specified in the SAVER Act. The 187 appointed delegates, half appointed by President Bush and the Republican leaders in Congress and half appointed by the Democratic leaders in Congress, were a diverse group representing state and local governments, professionals and other individuals working in the fields of employee benefits and retirement savings, private sector institutions including employers and unions, the general public and members of Congress. A list of delegates is provided as Appendix C.

Generational Framework - The common goal of all Summit delegates was to help all Americans retire with security and dignity. Understanding the different attitudes, behaviors and concerns that are shaped by generation and life stage was considered a good starting point for designing approaches to improve retirement savings. The Summit breakout sessions focused on these issues with delegates divided into four groups, each targeting one of four generations:

The age boundaries between generations and between life stages, and their labels, do vary from expert to expert, but the underlying principles are the same.

A generation is a group of people who are born over the same time span and who share a collective personality. The personality of each generation—those common beliefs and behaviors forged in youth—shapes attitudes toward work, family, lifestyle, money, retirement and the future. For example, members of the Silent Generation were influenced directly or indirectly by the Great Depression and share a collective approach to money that is cautious. Recognizing that different generations have different collective personalities can improve approaches to retirement savings education by using methods that appeal to each generation.

A life stage is a phase in the human life cycle that is correlated with age and defined by a central social role with its concomitant pursuits and concerns. For example, youth is associated with learning and preparing for work and citizenship. Each life stage brings new opportunities and challenges for outreach.

The work of William Strauss and Neil Howe, best-selling authors about American generations, provided the generational and life stage framework for the Summit. They spoke at dinner on the first day of the Summit. Strauss said “We all know how history shapes generations . . . it’s equally important to realize that generations shape history.”

Strauss encouraged delegates to “understand how, as these generations age, they will bring something new into each phase of life, and because they are all doing that together, the entire mood of our society will shift, and some things that we may think today are not possible to do . . . will be possible in ways that we can’t quite understand today.”

The Summit challenged delegates to produce action plans specific to their targeted generation, with important and compelling messages, approaches and partners for delivering those messages. In addition, the action plans could include implementation steps, barriers, measures of success, potential policy considerations, and anything else delegates deemed appropriate.

Developing retirement savings action plans aimed at specific generations and corresponding life stages builds on the meaningful similarities among those in a generation but does not assume complete uniformity, nor does this approach dismiss real differences in income and wealth that directly affect retirement savings.

Americans could be segmented in many other ways, including gender, race, ethnicity, education and income. Surveys have found, though, that a generation’s attitudes toward retirement savings are generally comparable across gender, racial and ethnic lines at similar income levels.

Retirement Savings - Laying the Groundwork

U.S. Secretary of Labor Elaine L. Chao, host of the 2002 Summit, welcomed the delegates and gave them their charge to develop “real-world solutions that will help motivate all Americans, whether they’re teenagers or aging Baby Boomers, to save for retirement.”

Chao, addressing the delegates later in the Summit, reported that the retirement savings rate is too low for far too many Americans, with personal savings rates in recent years dipping as low as 1%. Recollecting and sharing her own struggles as a young daughter in an immigrant family, Chao expressed acute concern for people of color and minorities. She also pointed out that “young people, at a time of life when investing can make the biggest long-term impact, are not taking full advantage of the opportunities to save.”

Chao asked delegates to consider the retirement landscape, which has been transformed by an “earthquake of change.” Average life expectancy is 77 for Americans born today, more than a decade longer than their grandparents’ generation. Working a lifetime for one employer is no longer common, with today’s 32-year-old having worked for an average of nine different companies. Financial innovations have brought new investment vehicles from mutual funds to defined contribution plans.

Chao also asked the delegates to channel national energies to give people the needed help to save. She began with the workplace, where half of all working Americans do not have access to a company retirement plan. The financial community can provide expert investing advice and offer “solutions to urgent needs from cost-effective financial services to affordable annuities.” She also challenged the federal government and the Department of Labor, where she noted retirement security is their specialty.

Chao, a member of the President’s Task Force on Retirement Security, described President Bush’s retirement security proposal introduced in late January 2002. The Task Force was guided by three principles: choice, control and confidence. Choice is giving people power over how to invest their retirement savings. In the President’s plan, workers would be able to diversify their 401(k) holdings of company stock after three years. Control is letting employees have “fair and informed” control of their savings, including complete and timely reports on the status of their investments. Confidence will come from access to reliable professional investment advice.

In closing, Chao announced a new initiative: making Independence Day a yearly national marker for retirement security—“a time for American workers to make a promise to themselves, a promise to make their own lifelong financial independence a priority in the years ahead.”

Cynthia Drinkwater, Senior Director of Research for the International Foundation of Employee Benefit Plans, gave a brief overview during the Summit of the state of retirement savings in the United States.

Drinkwater said research suggests “that there is an urgent need for effective retirement savings education” because people are “simply not saving enough for retirement.” Retirees spend at relatively high levels, needing between 74% and 83% of their preretirement income to maintain their standard of living in retirement, yet only 56% of households are adequately prepared.

Drinkwater reported the aggregate income of those 65 and older by source (see table below), and expects that in the future personal savings will become an even more important source of retirement income. “A person will be hard-pressed to reach a replacement ratio of 70% to 80% of preretirement income without personal savings to supplement Social Security and any employment-based plan he or she may have.”

Drinkwater pointed out that, although about two-fifths of the aggregate income of those aged 65 and older comes from Social Security, actual reliance on Social Security is highly dependent on income, with those in the lowest quintile receiving 82% of their income from Social Security.

Drinkwater said that, although the coverage rates in employment-based retirement plans haven’t changed much over the last 30 years, remaining at about 50% for full-time, private sector workers, the types of retirement plans that employees are saving in have changed dramatically. The number of defined contribution plans and participants is increasing relative to that of defined benefit plans and participants. With defined contribution plans, the employees bear more of the risk and responsibility for accumulating adequate retirement income.

Drinkwater expects that future retirees will be more likely to work during retirement for several reasons: the earnings test has been eliminated for Social Security and the eligibility for full benefits has increased to 67; people are living longer; and they want to maintain their employment-based health care coverage.

Drinkwater concluded by saying, “The most effective retirement savings education will make it clear to people that they hold retirement security in their own hands, and it will motivate them to develop and live by a personal retirement savings strategy.”

Ann L. Combs, Assistant Secretary of Labor for the Pension and Welfare Benefits Administration, affirmed Drinkwater’s observation, adding that effective retirement savings education “won’t simply change what people know. It will change what people do. And this requires messages that resonate with the values, behaviors, pursuits and concerns of your target audience.”

Plenary Sessions - A National Priority, a Need to Focus

The Summit’s plenary sessions featured many distinguished speakers including President George W. Bush, Federal Reserve Chairman Alan Greenspan and a number of Congressional leaders active in issues affecting retirement security.

President Bush began by noting that “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.”

“Retirement is a time of new beginnings,” he commented. “Increasingly, the choices of seniors will be limited by only two things: the state of their health and the state of their savings.” Seniors’ retirement options “should not be limited by arbitrary dates or obsolete stereotypes.” President Bush, identifying himself as a Baby Boomer, noted that 80% of Boomers say they plan to work at least part time in retirement.

Legislation strengthened and updated the retirement system in important ways in 2001, the President said. Now the main challenge is protecting savings. The President outlined the four key elements of his retirement security proposal:

• Workers in 401(k) plans would be allowed to diversify their holdings of company stock into other investment options after three years. “We need action to give workers a right to put their eggs in more than one basket,” he said.

• Blackouts—the periods when employees are prohibited from accessing their 401(k) accounts, typically because of a change in recordkeeper—would be announced at least 30 days in advance, and would apply to employer stock holdings of company executives even outside their 401(k) accounts. “What’s fair on the top floor should be fair on the shop floor,” said President Bush.

• Workers would receive complete quarterly reports about their 401(k) accounts.

• Workers would have increased access to investment advice tailored to their needs by changing current law to remove the threat of lawsuits against employers who provide sound professional investment advice.

The President also noted the importance of personal retirement accounts in which workers could voluntarily invest part of their Social Security taxes directly in the market. “Someone retiring today after 45 years of work would be entitled to a monthly benefit of $1,128 from Social Security. If those Social Security taxes had been invested in the stock market during the same period of time, that person would now have . . . income of more than $3,700 a month,” he said. Personal retirement accounts would give older Americans “access not just to a monthly check, but to personal wealth.”

In closing, the President exhorted delegates “to think not only about the short-term issues we face”, but also to “fundamentally change America for the better”, ensuring “that opportunity extends its reach throughout every neighborhood.”

U.S. Secretary of Commerce Donald Evans, introducing Federal Reserve Chairman Alan Greenspan, commented that “trust is the foundation of our economic system—a system that is still the envy of the world. It is absolutely vital that Americans have trust and confidence in their retirement savings. Our social contract depends on it.”

Chairman Greenspan began by saying that “one of the most complex economic calculations that most workers will ever undertake is without doubt deciding how much to save for retirement.” The decision to save, and how much, affects the nation’s economy. Savings are crucial to economic growth in two ways:

• Savings contribute to America’s capital markets by funding capital investments and thereby boosting productivity.

• Savings give retirees individual spending power.

Productivity has sharply improved in the last decade, thanks to a variety of factors. By far the most important, however, are “the gains in output attributable to technological innovation, especially information technology,” the Chairman said. This innovation was funded in large part by savings.

Greenspan said, “From the point of view of an individual household, saving reflects financial claims adequate to meet future needs; the focus for the economy as a whole, of necessity, must be on producing the real resources to redeem the financial assets” as the ratio of retirees to those still working rises precipitously starting at the end of the decade. He added that this phenomenon extends beyond the retirement of the Baby Boomers and reflects the aging of our society.

With policies set for economic growth, Greenspan asked, “What level of personal stress, and some argue increased inequality, which may be byproducts of a highly competitive, high-octane economy, have we as a nation chosen? Is that level compatible with the level of domestic saving, and possibly of risk taking, consonant with the elevated productivity growth necessary to meet the needs of an aging population?” A national consensus on this question will have to be forged, Greenspan said.

Finally, Greenspan addressed Social Security. He said that, although the law requires that Social Security benefits be paid only to the extent they can be financed out of current payroll tax receipts, “I cannot imagine a viable political scenario in which full payment of benefits will not be forthcoming.” He recommended considering whether the Social Security system will need to be better aligned with the funding provisions of private pension and annuity systems.

Senator Edward Kennedy, Chairman of the Senate Health, Education, Labor and Pensions Committee, focused on the need to extract lessons from the Enron situation and closing the loopholes that allowed it to happen. According to Kennedy, “The real test of pension reform is whether it will prevent future Enrons.”

The Senator said he would introduce legislation that would protect workers in 401(k) plans against employer pressure to buy company stock. “My bill will stop employers from having it both ways when it comes to pushing their stock in 401(k) plans. They cannot both match in company stock and push workers to buy company stock as an investment option in their 401(k) programs,” he said. Workers also would be informed of executive stock sales.

As for Social Security, it “must remain the guaranteed benefit it is today,” Kennedy said. Substituting private retirement accounts for this guaranteed benefit would subject retirement security to the uncertainty of the market. “The substantial decline in stock values we have seen in the past two years underscores the inherent risk in private accounts.”

Representative John Boehner, Chairman of the House Committee on Education and the Work Force, introduced, with Representative Sam Johnson, the Pension Security Act, based largely on the President’s proposal, in early 2002.

The Congressman cautioned: “We need to walk a very fine line in providing new protections for American workers’ retirement security without limiting their choices; without pushing employers out of the system and limiting the number of new plans that are created. We shouldn’t let one rotten apple spoil the entire barrel.” According to Boehner, the solution is not to cap workers’ ownership of company stock, as some members of Congress have proposed, but to offer workers “the same solid investment advice that’s available to the top brass at many companies.”

Boehner also argued against the view that 401(k) plan administrators, who include America’s top investment houses, should be prevented from giving investment advice to workers in their plans because of the potential conflict of interest. “To say to those who have the most successful track record in managing large retirement funds that they would be prohibited from giving investment advice, I think, makes no sense,” he said.

The Congressman was the first of several speakers to suggest taking another look at defined benefit plans to see if they can be simplified and made more attractive to employers as an option for company retirement programs.

Congressmen Rob Portman and Benjamin Cardin have emerged as a “great bipartisan team . . . recognized by all as leaders in the effort to promote retirement savings,” Combs said in introducing the two speakers. The Portman-Cardin bill, passed in 2001, made significant reforms to the pension system, enhancing portability, simplicity and individuals’ ability to put money into 401(k)s and IRAs.

The two Congressmen are working on another comprehensive retirement security package, one “very similar to the President’s legislation,” Portman said. He solicited the delegates’ input for the plan.

“I see two great challenges,” said Portman. First, employee education is “the next great frontier” of pension reform. Second, “post-Enron, we have to make sure that folks out there believe their retirement accounts are secure.” This requires allowing people to diversify out of company stock and improving company information and disclosure, as envisioned in President Bush’s proposal.

The new Portman-Cardin package also will introduce a new idea: giving employees a tax incentive to use pretax earnings to buy investment advice services. Portman asked the delegates for feedback on this idea.

Cardin proposed two additional ideas for the delegates’ consideration. First, the age for required distribution of plan benefits would rise from 701?2 to 75; and up to $300,000 could be exempted from distribution. Second, he urged delegates to reflect on ways to make it easier for lower-wage workers to participate in retirement plans—for instance, through automatic enrollments.

Reception and Dinner Remarks - At the opening reception for the Summit, Senator Larry Craig, the ranking member of the Senate Special Committee on Aging, said that the demographics of aging will affect retirement. “People are living a lot longer, and they are living in good health, and they are enjoying themselves and they are wanting to sustain for themselves a way of life and a lifestyle that is not unlike the kind they had prior to retirement.”

Congressman George Miller, the ranking member of the House Education and the Workforce Committee, spoke at the reception about restoring Americans’ faith in the retirement savings system in light of Enron. Americans are “entitled to once again have faith in the American marketplace and to know that it’s on the level for them, and it’s on the level for their employers, and it’s on the level for their families.” He encouraged delegates to keep in mind the notion of equity, which includes disclosure to employees, notification, representation on the board of the pension plans, and fairness between workers and executives during blackout periods.

Secretary Chao honored Senator William Roth at dinner on the first day of the Summit. Roth’s legislative record includes creating the Roth IRA, pioneering the education IRA, making IRAs available to homemakers, and championing allowing seniors to earn more income without loss of Social Security. Chao presented Roth with an award for Lifetime Achievement Enhancing the Retirement Savings of American Workers and Their Families.

Roth said “Encouraging people to save has always been a special interest of mine. And looking back on my 34 years in Congress, I have to say that creating the Roth IRA was one of my proudest achieve-ments . . . the Roth IRA has enabled Americans of all ages, of all backgrounds, to save for their retirement.”

Reinforced by his own personal experience, Roth believes “The complex rules that cover the current retirement savings vehicles, like contribution limits, deductibility provisions, and eligibility rules, can be daunting to the average person, so daunting that many Americans become discouraged and end up not investing for the future.”

Congressional Breakfast - At the Congressional breakfast on the second day of the Summit, Senators Arlen Specter and Tim Johnson joined Representatives Earl Pomeroy and Sam Johnson to offer a variety of perspectives on retirement savings.

Senator Arlen Specter said he supported legislation to increase the limit on IRAs from $2,000 to $5,000. “To defer those funds for retirement is really very, very vital,” he said.

On the idea of personal retirement accounts for Social Security, Specter commented, “I’ve always been reluctant to see individuals manage their own portfolios because it is so complicated. But if a portion of it were to be set aside so that there was still security in the balance, and [the investing] was done with professional management, then I think it has a lot of merit.”

Representative Earl Pomeroy—an original co-sponsor of the SAVER legislation—began by noting that today’s retirement system arose haphazardly, yet the elements “all work together by fortuitous accident in kind of a complementary fashion,” providing universal coverage, basic income guarantees, strong incentives for personal responsibility and a significant role for employers.”

One problem, however, is the need to match an individual’s nest egg to their longevity, he said. “We’ve been looking at asset buildup. What about asset drawdown relative to years in retirement?” Annuity vehicles will become a popular tool for addressing this risk, he suggested. Congress can help with tax incentives to encourage the purchase of annuities. “I’m convinced that we’d save money in the long run doing the tax incentive for annuity purchase, instead of being prepared to pay full services for people who have outlived their assets by not having the protection,” he said.

Pomeroy argued against private retirement accounts, charging they would add unacceptable risk to a retirement system that already has “loads of risk.” Yet the two sides can find common ground, he urged. One way would to be to stop spending Social Security payroll taxes on unrelated government functions. “Budget projections show we’re on track to spend $1.5 trillion of cash coming in for Social Security on other government expenses over the next ten years. This is unacceptable.” He stated that Social Security funds should be reserved for Social Security.

Representative Sam Johnson, co-sponsor with Chairman Boehner of the Pension Security Act and Chairman of the House Subcommittee on Employer/Employee Relations, said his committee plans to address the fact that many companies simply cannot afford to offer retirement plans. The problem, Johnson said, is “well-intentioned government regulation” that imposes high costs on employers, preventing many from setting up plans.

Senator Tim Johnson, the final breakfast speaker, chairs the Senate’s Financial Institutions Subcommittee. Along with colleagues on the Banking Committee, Johnson has co-sponsored the Safe and Fair Deposit Insurance Act of 2002 (the Safety Act), which proposes that FDIC coverage be extended from its current limit of $100,000 to $250,000 in the case of retirement accounts. “We ought to allow people to put it into hometown banks and keep that money turning over in their local community, while at the same time giving themselves an insured safe haven for their money,” he argued.

Overview of Breakout Sessions - Tackling the Challenge

For the breakout sessions, delegates were divided into four generational teams, each receiving an initial briefing from a generational expert. Each generational team was then divided into six subgroups. Each subgroup was charged with creating an action plan for their assigned generation.

This report highlights selected aspects of the action steps developed by the delegates. The action steps are presented in the sections that follow, but it is worth highlighting some of the common findings here.

The recommended actions were to be specific to the targeted generation with important and compelling messages, approaches and partners for delivering those messages. In addition, delegates were free to consider any methods for or approaches to improving retirement savings, including barriers, implementation steps, measures of success, potential policy considerations, and anything else delegates deemed appropriate.

As expected, delegates did not always agree with each other and no formal consensus was reached. Thus, ideas presented here may not be recommendations of the full delegation. Furthermore, as noted above, each of the 24 subgroups had some latitude in what to address, which resulted in a wide range of concerns and recommendations.

Some of the common findings of the groups include:

• Recognizing the importance of investment education as individuals become more responsible for funding their own retirement

• Using partnerships with government agencies, business groups, unions, schools, community groups and faith-based organizations

• Building on existing programs and learning from what has been done before

• Placing retirement savings within the context of other financial and life-stage issues

• Involving the target generation in testing, improving and implementing the action plans—through focus groups, national contests and continued dialogue

• Recognizing that the Internet is a powerful medium for reaching all generations, but not the only means of communication

• Taking the message to wherever the generation is, such as health clubs for the Generation Xers, and church and public libraries for the Silent Generation

• Adding messages and educational materials to annual statements from the Social Security Administration or with paychecks

• Understanding the importance of policy considerations such as additional tax incentives, removing unnecessary regulations, and simplifying retirement plans for employers, especially small business

• Recognizing the diversity within each generation, with special attention to narrower segments such as women, minorities and economically disadvantaged communities

• Recognizing the value of a generation and life-stage approach for outreach and education, while keeping in mind those principles and human behaviors that are universal across generations

• Remembering that each generation influences the other generations, so reaching out to one generation can have a ripple effect on others. For example, Silent Generation grandparents have influence on their Millennial grandchildren, while Millennials have influence on their Xer and Boomer Generation parents.

Each generational team was asked to select two action plans for the facilitator to report at the closing plenary. One action plan would be the most specific to that generation, that is, an action plan that would likely be effective only with the assigned generation. The second selection would be the action plan that was the most innovative yet still realistic. The teams presented action steps at the closing plenary session but, due to time constraints, were unable to give full consideration to all of the recommended actions developed. Highlights of the action steps are presented in this report.

The Millennial Generation in Youth - No One Left Behind

Highlights of the delegates’ action steps are provided below.

Subgroup 1

• Create a Patriot Savings Bond school program for student investments, or create a special series bond for schools to give to children at age 12.

• Build upon existing programs, specifically the “Choose to Save” program of the American Savings Education Council, to teach 13- to 20-year-olds why, how, when and where to save.

• Begin a teacher education program to boost financial literacy among teachers. Make personal finance a required program for students.

Subgroup 2

• Segment the Millennials into different ages to reflect different interests and levels of development.

• Help younger kids save money with the message, “Change your future; don’t spend your coins.”

• Encourage parents to share with their children a portion of any money the children help the family save, by turning out unused lights for example, so that children learn the rewards and satisfaction of saving.

Subgroup 3

• Emphasize personal responsibility and accountability—saving is part of being a responsible citizen—and that earning, saving and spending are all interrelated.

• Encourage ownership of the message by the communities of interest that regularly interact with Millennials, such as Boy Scouts and Girl Scouts, 4-H and faith-based groups.

• Create a demonstration project with the National Collaboration for Youth, bringing grandparents and grandchildren together to work together on saving.

Subgroup 4

• Introduce the Young Patriots Savers Club, a voluntary program sponsored by the White House for kids in grades K–8 that encourages savings and financial goal setting.

• Solicit matching contributions from the private sector to give to lower-income children or a selected charity, according to the children’s instructions.

• Provide government incentives to financial institutions to offer this type of account and handle the subsequent recordkeeping.

Subgroup 5

• Ask youth to invest in themselves to keep America strong, playing to their sense of patriotism and desire for independence.

• Link saving to other areas of their lives, such as the investments they may make in work or learning.

• Keep refreshing the message to keep it relevant.

Subgroup 6

• Create a cultural sense that saving is something done all the time—it is not really a choice—through a “saving is smart” message.

• Elevate the status of financial awareness and responsibility education to the level of D.A.R.E. programs.

• Permit and encourage through tax incentives national wealth accounts, started at birth, that can be seeded with retirement savings of parents and grandparents.

A recurring element across subgroups was the absence of the “R” word—retirement, which was too far away to be relevant to this generation.

Generation X in Rising Adulthood - Independent Choices

Because they are so attuned to personal relationships, coaching is a superb learning vehicle for Gen Xers. Perhaps even more effective, though, is computer-based training: it melds just-in-time learning with individual control.

Highlights of the delegates’ recommended actions are provided below.

Subgroup 1

• Target Xers who are saving nothing or very little because they have the largest gap in retirement savings

• Appeal to flexibility in choice with a message to “save now” because “It’s your money, it’s your choice and it’s your future.”

• Use smart cards for savings, making saving easier and more viable.

Subgroup 2

• Create teams to present demonstration plans to any group that wants advice on setting up inexpensive and easily administered plans.

• Give incentives to smaller employers to offer and contribute to retirement plans, perhaps even subsidizing part of the match for a limited time.

• Charge a task force—consisting of representatives from the Treasury, Department of Labor and Small Business Administration with additional members from business and business groups, employees and the self-employed—to recommend to Congress regulations that could be removed in order to eliminate unnecessary costs or complexities.

Subgroup 3

• Target Xers with the message that “saving equals independence,” relying somewhat on scare tactics.

• Personalize messages, such as pay stubs that show anticipated amounts available in retirement.

• Create national measures and goals for savings—a savings meter, for example—and for financial literacy.

Subgroup 4

• Ask Xers to “earn your independence” by making sacrifices and through investment returns.

• Ask employees to specify upfront the proportion of any future pay increases that should automatically be deducted for savings.

• Change policy and outreach to recognize new kinds of retirement goals that may include, for example, retirement spread throughout one’s working life as sabbaticals.

Subgroup 5

• Encourage Xers to “save to independence day” and eliminate the heavy burden of credit card debt.

• Offer just-in-time learning by providing education at the time of need and make ideas accessible by using simple, quick messages with supporting, more detailed information available if requested.

• Attract and share the best personal savings stories through a national contest and promotion, with winners receiving cash contributions to their retirement accounts.

Subgroup 6

• Make learning about retirement savings fun, using approaches such as a dream episode of the Simpsons, a Sim retirement module (a computer simulation), and a newer version of the Jones game.

• Vividly describe the different outcomes likely with different rates of personal savings.

• Improve the safety of retirement savings through legislative initiatives that provide some basic level of insurance of retirement funds.

Independence, which may be more important to this generation than any other, was a recurring theme across subgroups.

The Baby Boom Generation in Midlife - Preparing for Transition

Maddy Dychtwald, a leading authority on demographics and generational marketing, and author of the forthcoming book Cycles: How We’ll Live, Work and Buy, provided background on the Boomer Generation, defined at the Summit as those born between 1943 and 1960.

The Boomer profile has been well-documented: independent well-educated risk takers who mistrust authority and love designing alternatives to the dominant system. What’s less well known about Boomers is that the majority of them are financially illiterate, Dychtwald said.

About one-third of Boomers have saved responsibly and are ready for retirement. The other two-thirds are alarmingly unready.

Subgroup 2

• Help Boomers prepare to manage money and risk in retirement.

• Remove legal barriers that impede smooth, phased transitions into retirement.

• Recognize the different financial circumstances of older Boomers compared to younger Boomers, attributable to different economic and workplace conditions.

Subgroup 3

• Send a “holy cow, you’re 50” postcard from the President on July 4th to everyone who turns 50 that year, with a message regarding financial independence.

• Use the “holy cow” theme in other channels and languages.

• Encourage and enable a credit card feature that directs a percentage of purchase amounts to a retirement account.

Subgroup 4

• Focus on the special needs of female and minority Boomers, reaching them at the local grass-roots level.

• Partner with payroll companies to encourage women and minorities to save through automatic deductions.

• Allow unused 529 plans to be rolled over into retirement accounts.

Subgroup 5

• Create a sense of hope and urgency regarding retirement savings.

• Create mandatory deferrals for employment-based retirement plans that automatically enroll employees.

• Partner with Medicare and other organizations concerned with conserving assets to address issues such as long-term care.

Subgroup 6

• Let Boomers know that “now is the time” to start saving—it’s never too late.

• Convey to the two-thirds of Boomers who save the least just how much they realistically need to save for a secure retirement.

• Allow pretax dollars for financial planning and provide tax incentives for non-retirement savings vehicles.

There were two recurring elements across the recommended actions for this generation. First, Boomers need to become fully cognizant of the tremendous life transition that takes place in retirement and that it’s never too late—Now is the time to start planning for that transition. Second, saving should be made easier, such as a Form 1040 check off that earmarks tax rebates for retirement savings.

The Silent Generation in Elderhood - Our Turn

Also, because many Silents are at an age when memory and eyesight are declining, messages should be simple and clearly presented. Response should be made easy.

Highlights of the delegates’ action steps are provided below.

Subgroup 1

• Reach Silents with a “continue to contribute” message that takes a holistic approach and encourages continued contributions to financial security through savings and workplace-based retirement savings plans; to health through diet and exercise; to family through grandparenting and estate planning; and to society through philanthropy and volunteering.

• Improve confidence that the generation is receiving objective advice from qualified experts by requiring advisors to register and by expanding existing pension counseling projects.

• Streamline the Tax Code to enable smoother phased retirement.

Subgroup 2

• Target Silents who are still working or who have assets or income beyond Social Security with the message to secure their continued independence.

• Use Cooperative Extension agents to “train the trainers” for educational programs targeting Silents.

• Reach Silents where they congregate; for example, place brochures at early bird specials, bookmarks at public libraries and educational materials at places of worship.

Subgroup 3

• Ask Silents through a “Save America, Help America Save” message to encourage those younger than themselves, especially youth, to save more.

• Educate Silents to educate others.

• Expand Section 529 plans beyond college savings and remove income limits on IRAs and Roth IRAs.

Subgroup 4

• Encourage Silents to save for future generations and to help future generations save more themselves.

• Exempt from gift tax and from IRA limits any gift made by a Silent to a minor’s IRA or to any working person who is willing to match the contribution by the Silent.

• Enable greater information exchange between government and private sector organizations to help Silents better assess their financial situation and the situation of their grandchildren.

Subgroup 5

• Target Silents with a “saving never goes out of style” message, using nostalgic appeal.

• Encourage those with fixed incomes to save.

• Allow tax-free rollovers from qualified retirement accounts to Section 529 plans to help out grandchildren.

Subgroup 6

• Work with the Social Security Administration to deliver tailored messages based on age, death of a spouse, earnings and other factors.

• Provide coupons redeemable for financial advice through local Social Security offices or through a public-private partnership.

• Address the special educational needs and life experiences of Silent Generation women.

The recommended actions had a recurring theme of two messages: to save for the Silents’ own well-being and to help other generations save. A common design element in the action steps was to, first, simply recognize this generation and, second, to position the group as vital to America’s future.

Conclusion - A Challenge of Leadership

Ann L. Combs, Assistant Secretary of Labor, Pension and Welfare Benefits Administration closed the Summit with the Department of Labor’s commitment to follow through on the ideas developed by the delegates. Combs told delegates “this is just the beginning of a new national outreach effort on retirement savings.”

Combs acknowledged that lawmakers and regulators could help the retirement system evolve as demographic and economic realities change, “but the greatest challenge is not legislative—it’s a challenge of leadership. We can’t rely solely on Congress or even the President to change the culture, the attitude toward retirement savings. That task cannot be accomplished without an enormous group effort and without the leadership of many, many people.”

Combs asked delegates to “keep your passion for these issues and share that passion, for we must inspire” each generation, young and old. “Don’t underestimate your own ability,” she told delegates, “to cause a ripple effect in your own community, in your work, with your family, with your friends.”

Appendix A - The Summit Agenda

Appendix B - Generational Speakers / Facilitators

Appendix C - Statutory and Appointed Delegates

• Background Materials
• Final Report
• Summit Video
• Speeches and Remarks
• Summit Delegates
• Summit Agenda
• Summit RFI
• RFI Comments
• F.R. Notice

• Background Materials
• Final Report
• Speeches and Remarks
• Summit Agenda
• Webcast

• Appointed
• Statutorily Required

• Background Materials
• Final Report
• Summit Agenda

• Appointed
• Statutorily Required