Despite $26 trillion in U.S. retirement savings, only half of American workers between ages 25 and 64participate in employer-sponsored retirement plans and 53% of facea substantially reduced standard of living when they retire,according to the new book “From Here to Security: How WorkplaceSavings Can Keep America’s Promise.”

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In addition, Social Security, which is not included in that$26 trillion figure, is facing a shortfall that could lead to a cutof more than 20% in benefits by early 2034.

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That’s equal to $4.13 trillion in present value, according toHarry J. Conaway, the CEO of the Employee Benefit ResearchInstitute (EBRI), one of several panelists participating in aretirement policy forum Monday in New York.

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“The retirement savings challenges are real … [but] the goal ofachieving retirement security can be met," said Robert L. Reynolds,author of “From Here to Security” and CEO of Putnam Investments andGreat-West Financial, which owns Empower Retirement, the country’ssecond largest retirement services provider. “We know what works…There’s no need to reinvent the wheel.”

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In his new book, which served as the kickoff for today’s forum,Reynolds stressed the need for all workers to have access toretirement plans (twenty-nine million households currently do nothave access, though 46.5 million do, according to a 2016 EmpowerRetirement study).

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He also laid out the components of what he calls WorkplaceSavings 4.0, retirement strategies that have proven to maximizesavings:

  • auto-enrollment for new employees and existing employees whohaven’t contributed

  • auto-escalation of contributions up to 10% or more

  • income and age-appropriate investments such as life cycle(target date) funds and balanced funds

Adding auto-enrollment to a retirement savings plan boosts themedian replacement of employees’ pre-retirement income from 79% to92% of pre-retirement income, according to Empower Retirement’sLifetime Income Study, cited in Reynolds’ book; includingauto-escalation raises replacement percentage to 100% or more.

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Currently, only about 58% of defined contribution planscurrently offer auto-enrollment, and about half of them limitauto-enrollment to new hires, according to Reynolds’ book. Farfewer offer automatic escalation of contributions – just 22% ofplans with 5,000 or more participants and 12% of smaller plans.

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The strategies included in Workplace Savings 4.0 would impactmore than savings and security. They would also help promotestronger economic growth as more monies enter the capital marketsand reduce the growing wealth gap in America, according to panelmembers.

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They all favored some type of national policy to promote theseand other strategies to boost retirement savings, including changesin Social Security, but acknowledged that tax reform initiatives inWashington could pose a potential setback.

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“100% Rothification of the 401(k) market would be verydetrimental to the system. I would be totally against it,” saidReynolds, referring to Washington talk about replacing the currentsystem of pretax contributions to 401(k) plans with aftertaxcontributions, as in Roth retirement savings plan. Congressionalmembers are reportedly considering the change to help pay for taxreform, making up some of the lost revenue from tax cuts.

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But Reynolds noted contributions to 401(k) plans are not taxfree, but tax-deferred; taxes are paid when funds are withdrawn.“It’s not right to think of them as revenues lost forever,” saidReynolds, noting that this view reflects in part the 10-year budgetscoring that Congress uses.

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He said he could possibly live with a system that combines about$9,000 in pretax contributions with the rest as after-taxcontributions.

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EBRI is in the process of studying the impact of potentialalternative scenarios to the current system, according toConaway.

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Bernice Napach

Bernice Napach is a senior writer at ThinkAdvisor covering financial markets and asset managers, robo-advisors, college planning and retirement issues. She has worked at Yahoo Finance, Bloomberg TV, CNBC, Reuters, Investor's Business Daily and The Bond Buyer and has written articles for The New York Times, TheStreet.com, The Star-Ledger, The Record, Variety and Worth magazine. Bernice has a Bachelor of Science in Social Welfare from SUNY at Stony Brook.