America faces looming retirement crisis if our policymakers fail to act

Some futurists predict there is a child under the age of 10 today who will be the first to live to 200 years old. Thanks to advances in medicine, lifestyle and nutrition, many of us will live longer than our parents and grandparents, as what we once thought of as science fiction is now closer to reality.

This good news, however, dramatically changes the math of retirement savings. It’s clear that what we’ve all put aside for the future will need to last much longer than we imagined. Awareness of a coming retirement crisis in the United States has been growing for years. We’ve all heard the reasons: Corporate pensions are all but gone, Social Security is not and was never intended to be a primary source of retirement income, and self-funding retirement has proven ineffective.

{mosads}The numbers are disturbing. Nearly half of all Baby Boomers say they have $100,000 or less saved for retirement, while more than half of all Gen Xers have less than $10,000. These amounts, which wouldn’t have been enough for previous generations to retire comfortably, certainly won’t suffice now. Millennials, who are at the early stages of their careers and have financial pressures other generations don’t, could be in even worse shape.

Given all of this, millions of Americans could work hard their entire lives only to retire poor. That would be a tragic prospect for individuals, and a potential economic catastrophe for public policy, as calls for an expanded “safety net” would likely swell the future federal deficit.

The insurance industry and policymakers must work together to avoid this bleak future. Insurance companies are uniquely positioned to mitigate the risks Americans face as they approach retirement through risk pooling and other techniques. State, federal and self-regulatory policymakers need to acknowledge the retirement crisis, coordinate with each other, and encourage insurance companies and financial professionals to provide the services that people need to access protected, reliable lifetime income in retirement.

This would help bridge the gap between what they have been able to save, what they’ll receive from Social Security, and what they’ll need to maintain their lifestyles. Specifically, the insurance industry must simplify the products and language of retirement planning to clarify the role that products like annuities can and should play in helping to create protected, predictable income in retirement for millions of Americans.

Policymakers need to streamline and harmonize the multiple, complex and inconsistent standards of conduct and disclosure requirements that govern retirement solutions, which decrease access to advice, increase costs for those who can afford advice, and generally breed confusion for many advisors and the people who need their advice. We need to address the regulatory thicket in ways that will make the retirement crisis better rather than worse.

Finally, it is incumbent on all of us to increase our commitment to financial education in schools and in communities, creating opportunities to engage in innovative ways at every life stage to empower consumers financially. We don’t have a lot of time. The retirement crisis is real. With the federal debt already above $20 trillion and projected to continue to grow, policymakers must embrace working with the industry for solutions.

Barry Stowe is chairman and chief executive officer of the North American unit of Prudential Plc, which includes Jackson National Life Insurance.