Standing Up for Main Street Investors and Retirement Savers
ICI advocates for policies that promote retirement security and strengthen the middle class.
Key Takeaways:
- The current retirement savings system is fostering economic security in retirement for Americans across all income levels.
- Voluntary retirement accounts like IRAs, 401(k)s, and 403(bs), along with Social Security, have helped create a stronger middle class.
- ICI supports building upon the strengths of the current voluntary retirement system through innovations and incremental reforms.
- Defined contribution retirement plans and IRAs offer many benefits that include the habit of saving and investing; the ability to accumulate, consolidate, and preserve balances as workers move through their careers; and a wide variety of investment options.
- We encourage Congress to strengthen the tax incentives for defined contribution plans and IRAs to help more Americans save for retirement.
ICI is committed to defending the tax‑advantaged U.S. retirement system because it works for most Americans. Together with Social Security, employer-sponsored retirement plans, like 401(k)s, and individual retirement accounts (IRAs) have helped build the middle class, giving millions of everyday Americans a financially secure retirement.
ICI research shows that Americans value their tax-advantaged retirement accounts:
- More than 70% of retirees rely on a combination of Social Security benefits and income from retirement plans.
- Nearly three-quarters of U.S. households have tax-advantaged retirement savings through work or IRAs.
Supporting the Fund Industry’s Ability to Innovate to Better Serve Investors
ICI advocates for policies and regulations that encourage technological and product innovations that benefit investors and retirement savers. Responsible innovation has democratized access to the markets and investing. For example, the evolution of technology has enhanced accessibility to the financial markets by allowing investors of varied wealth, income, and experience levels to overcome traditional barriers to investing; and product innovations have allowed funds to provide investors with more investment options at lower costs.
Partnering with Policymakers for Sound Regulation
For more than 80 years, ICI has partnered with policymakers and regulators to elevate the voices of long-term investors and retirement savers:
- ICI has supported retirement reforms, including the SECURE and SECURE 2.0 Acts, that have expanded access to employer-sponsored plans and made it easier and cheaper for large and small employers alike to offer their employees retirement plans.
- We have called on the SEC to update the Investment Company Act of 1940 to keep pace with market changes and technological advances—and to generate middle-class wealth creation.
We believe innovation and incentives improve retirement security, and we have long supported policy initiatives such as automatic enrollment, automatic escalation, and life-cycle investing that refine the existing system.
Key Resources:
A Closer Look at the Facts Shows a More Optimistic Outlook for the US Retirement System
Employer plans and individual retirement accounts (IRAs) are an important source of income for all but the lowest-income retirees. Either directly or through a spouse, more than 70 percent of Americans over age 70 receive income from retirement plans. That share increases rapidly with income, however, to nearly 90 percent for those outside the bottom quartile of the income distribution. These statistics, and other results from our new research analyzing tax data, challenge assertions that the voluntary component of the US retirement system is failing and leaving retirees too reliant on Social...
Ok, Boomer: Retirement Prospects for Younger Americans Actually Look Bright
Judging by some narratives, you might think that young Americans face a bleak financial future. Whereas Baby Boomers and older generations benefited from a robust economy and outsized investment gains, Gen Z and Millennials have suffered ballooning expenses and other economic headwinds that have curbed their ability to save—or so the story goes. While it’s true younger generations manage substantial student loan debt while working to establish careers and families, they have also made more progress in retirement saving than prior generations had at the same stage of life. Thanks to the...
Stripping 401(k) Tax Breaks Won’t Fix Social Security
More American retirees get income from retirement plans today than ever before. In combination with Social Security benefits, this income helps most maintain their standard of living as they transition into retirement. These facts may come as a surprise to many given the steady stream of headlines about a looming retirement crisis and widespread concerns about the shift from defined benefit (DB) plans to defined contribution (DC) plans in the private sector. To be sure, the US retirement system faces substantial challenges as the American population ages. Arguably the biggest challenge will be...
