Rebuilding Savings and Investments
Our current economic challenges have not only put a strain on our day-to-day budgets, they’ve added a great deal of uncertainty to our financial futures. Many seniors have seen their retirement plans dry up, creating a great deal of anxiety for how they will pay their bills and cover their medical costs. Those who have not yet reached retirement age have also seen their 401(k) and pension plans slashed dramatically and are worried about how to rebuild these retirement accounts. Many working families have also had to dip into their savings accounts, just to cover their monthly budgets during these difficult economic times.
Congress needs to take action to help workers and families begin to rebuild their savings and retirement accounts, and prepare for the future. That is why I am supporting the Savings Recovery Act, which I introduced this month with several of my colleagues. This bill includes a number of provisions that will help working families recoup the losses that have been suffered and once again build up the savings and retirement accounts that give us all confidence in our financial futures.
Under current law, individuals are limited in the contributions, including “catch-up” contributions, that can be made to retirement accounts. The Savings Recovery Act reduces those limitations and allows for a faster recovery. It also ends the marriage penalty, which currently allows singles to contribute more than married couples. Current law also compels retirees to withdraw from their retirement accounts, even if doing so during difficult economic times would result in significant losses. A temporary moratorium on this practice has been enacted for 2009, but this bill extends it for another three years.
This bill expands the amount of tax-free contributions that can be made for college savings. For those parents who are worried about how they will afford college tuition for their kids, this is a critically important initiative. This bill also gives parents greater flexibility in making changes to college savings accounts, so that adjustments can be made as circumstances change.
In order to rebuild confidence for investors, and help retirement plans to grow once again, the Savings Recovery Act suspends the capital gains tax and increases the amount of capital losses that can be deducted. This means that investors will get to keep more of what they earn, and will also be penalized less for what they lose. These are important steps to take to begin restoring confidence in our markets and attracting new investors, which in turn will help retirement and pension plans to grow.
This legislation also reduces the earnings penalty, which cuts Social Security benefits for working seniors. During these tough times, seniors should not be penalized for seeking additional income, and this bill lets them keep more of their benefits.
The Savings Recovery Act takes a number of important steps to help working families rebuild the retirement and savings accounts they depend on for financial security. While I continue to fight for policies that will help restore our entire economy, the provisions in this bill are critical to helping all of us once again have confidence in our financial futures.
