Social Security can be reformed to secure Americans' retirement, said Paul Volcker, a top adviser to President Barack Obama.
“Social Security is the bedrock of any retirement policy in this country,” said Volcker, chairman of the president's Economic Recovery Advisory Board, at a retirement forum in New York Thursday. “There’s plenty of room and plenty of need for retirement programs on top of that.”
Having enough income for retirement has become a focus of the administration amid concerns that Americans will outlive their savings. The president's fiscal 2011 budget proposed changing government rules to allow annuities within 401(k) plans and requiring most businesses that don’t offer retirement accounts to automatically enroll employees in direct-deposit Individual Retirement Accounts.
“None of them stand out as the great savior,” Volcker, a former Federal Reserve chairman, said of the government proposals. Reforming Social Security is “doable,” he said, in part by changing the benefit calculation so that it won't rise as fast for higher-income Americans as it does under existing law and by “jacking up the retirement age.”
Volcker said the retirement age should be raised “by maybe a year or so” in an interview with Bloomberg Television. The increase should be “very gradually implemented,” he said, with a phase-in period “strung out over 15 or 20 years.”
Not enough savings
The age to retire with full benefits is 67 for those born in 1960 or later, according to the Social Security Administration.
About 63 percent of low-income workers may retire without any savings to supplement Social Security, according to a report by the Government Accountability Office, and 78 million Americans donít have retirement plans through their employers, according to the government.
Volcker spoke at an event organized by Axa Equitable Life Insurance Co., a unit of Axa SA, Europe's second-biggest insurer. About 350 financial professionals and clients of the insurer attended, according to Michael Arcaro, a spokesman for Axa Equitable.
The 82-year-old Volcker also said allowing the federal estate tax to expire Jan. 1 was “ridiculous” and “illustrative of the dysfunction in government.” If Congress doesn't act, the estate tax will be reinstated in 2011 at a 55 percent rate on estates valued at more than $1 million.
Volcker was chairman of the Federal Reserve from 1979 to 1987.