Skip to content

Local hearing addresses imperiled retirement plans

on October 21, 2008


Oct. 22– Rep. George Miller (D-CA) and Rep. Lynn Woolsey (D-CA) were back home this morning, listening to Bay Area citizens and economic experts about the future of American’s retirement plans in light of the growing financial crisis. The hearing, held in San Francisco City Hall as part of a series by the Education and Labor Committee, featured a panel that advocated both new approaches to retirement planning, and more clarity and honesty in 401(k) investment policies.  

Panels confer about Americans' beleaguered retirment plans

Panelists confer about Americans' beleaguered retirement plans

Miller, who chairs the committee, argued for suspending a tax penalty that punishes retirement account holders who don’t regularly withdraw from those accounts when they reach retirement age.  The penalty should be halted at least temporarily, he argued, so “seniors who have seen their retirement savings evaporate don’t get penalized for trying to build those savings back up.”  In the long run, Miller said, the government needs to work to ensure that 401(k) accounts are stable enough to protect participating workers in their retirement years.

“Retirement security is in peril,” said Jacob Hacker, a panelist and professor of Political Science at UC Berkeley. “Increasingly, Americans find themselves on a shaky financial tightrope, without an adequate safety net if they lose their footing.” Hacker described the shift from “a traditional guaranteed pension that looked much like Social Security,” to “individual account plans like 401(k)s, in which returns are neither predictable nor guaranteed.”

People without adequate financial education who invest in 401(k)s are more likely to make poorer financial decisions, according to Shlomo Benartzi, professor of behavioral finance at UCLA. “Individuals have a tendency to buy at the peak,” Benartzi said, “and then panic when markets drop and sell at the bottom.” Benartzi also noted that individuals have “myopic loss aversion,” which is the tendency to focus only on short-term losses and lose sight of long term goals. Many place all their cash in savings accounts, which do not acquire enough interest for retirement. For both professors’ Hacker and Benartzi, teaching people about financial planning is key.

The hearing is part of a greater effort by House Democrats to develop an economic recovery plan in light of what they see as policy mistakes of the Bush administration.

“For too long, the Bush administration anything goes economic policy allowed Wall Street to go unchecked,”  Miller said in his opening remarks. “As we look at how we can rebuild workers’ retirement savings and our nation’s economy, the Democratic Congress will continue to conduct this much-needed oversight on behalf of the American people.”

The panelists’ academic discussions were underscored by local Bay Area residents, who spoke about their personal challenges in facing retirement.

Roberta Quan, 74, a retired California schoolteacher from San Pablo, described the financial difficulties of taking care of her husband, John, who was diagnosed with Alzheimer’s disease in 2000. When Quan could no longer serve as John’s caregiver, in 2006, she placed him in a residential care home, and the exorbitant costs of care, hospitalizations, and medications, have all but depleted her savings. “I am now faced with the insecurity of outliving my rapidly diminishing 403(b) account,” she said.||||||||||||||||||||||||||||||||||||

Oakland North welcomes comments from our readers, but we ask users to keep all discussion civil and on-topic. Comments post automatically without review from our staff, but we reserve the right to delete material that is libelous, a personal attack, or spam. We request that commenters consistently use the same login name. Comments from the same user posted under multiple aliases may be deleted. Oakland North assumes no liability for comments posted to the site and no endorsement is implied; commenters are solely responsible for their own content.

Photo by Basil D Soufi
Oakland North

Oakland North is an online news service produced by students at the UC Berkeley Graduate School of Journalism and covering Oakland, California. Our goals are to improve local coverage, innovate with digital media, and listen to you–about the issues that concern you and the reporting you’d like to see in your community. Please send news tips to:

Latest Posts

Scroll To Top