Transamerica Institute and Transamerica Center for Retirement Studies CEO and President Catherine Collinson joined Yahoo Finance Live to break down how COVID-19 has impacted Americans preparing for retirement.
ADAM SHAPIRO: Let's shift gears from the Federal Reserve to something equally important, and that is retirement for all of us. A lot of people may not be prepared for that. So we want to invite into the stream Catherine Collinson, CEO and president of Transamerica Institute and Transamerica Center for Retirement Studies. It's good to have you here.
And the reason we're going to talk to you is that there's a new compendium of findings about US workers that Transamerica Center has just put out. And what you found, among other things, that 27% of people feel that they are very confident that they will fully retire with a comfortable lifestyle. That 63% who are not confident, what do we do about that?
CATHERINE COLLINSON: Well, there's a lot of things that we can be doing right now. And as we are looking at a new president and new administration, now is a perfect time to put retirement security front and center on the agenda. Of course, you have the immediate economic recovery for all Americans is vitally important. But we also can't lose sight of the long-term.
SEANA SMITH: Well, and Catherine, when you talk about not losing sight of the long-term and then comparing that with what we could see from the Biden administration, what do you think should be the new administration's top priorities then so we aren't worrying about this in the long-term?
CATHERINE COLLINSON: In our survey, we actually asked the question, what should be the priorities for the new president and administration? And at the top of the list, the top four most often cited responses related to strengthening our safety nets, ensuring that Social Security is sustainable for generations to come, ensuring that medical expenses and out-of-pocket healthcare expenses are affordable, ensuring the sustainability of Medicare, and innovating new and affordable solutions for long-term care services and support. Those are the four biggies.
But there's also some things that were close behind it that also can really help Americans improve their retirement security. And one is expanding access to workplace retirement plans. Many workers-- workplace retirement plans have been proven to be one of the most effective, if not the most effective, means for people to start saving for retirement and save consistently over time. Yet, almost half of US workers are not offered a plan by their employers.
And I'll just add one thing. The issue is twofold. Many employers offer plans. In fact, the majority do. But they don't extend eligibility to their part-time workers. So a big part of solving this problem is expanding access to part-time workers, looking at the gig economy workers, and ensuring that self-employed also have an easy and affordable way to save for retirement.
ADAM SHAPIRO: Hey, Catherine, we spoke with Ted Benna, who actually is considered the father of the 401(k). We spoke to him back in December. And he pointed out that even if you have access-- and he's a big fan. They've created trillions of dollars of savings, retirement savings for people. But he said the 401(k) was never intended and should not be your sole source of retirement. And yet, for a lot of people, it's that and Social Security. So those two together, is that sufficient?
CATHERINE COLLINSON: Excellent, excellent question. And contextually, when 401(k)s came about, and it's going on 40 years ago, which is 1980-ish, defined benefit plans were quite commonplace, or what are known as traditional pensions. And when 401(k)s came about, they were meant to supplement that and Social Security. And what we've seen over time is 401(k)s have grown tremendously, but we've seen the disappearance of defined benefit plans.
So, now, people are up to saving for retirement both Social Security and through their 401(k)s. And if you start early and save consistently over time and don't have any gaps in employment or life events, you can do it. But for many, we need to be augmenting our savings through other means and really looking at how long we plan to stay in the workforce and when we plan to transition into retirement.
SEANA SMITH: Hey, Catherine, the results from your most recent survey, how does that compare going back a year or two years ago? And the reason why I'm asking this is just because to what extent has the pandemic exacerbated the fact that many Americans just don't feel comfortable with what they have saved?
CATHERINE COLLINSON: That's an excellent question. And what we see is retirement confidence was not spectacular before the pandemic. Our survey found-- our October survey found that one in five workers who are either employed or recently unemployed or furloughed said their retirement confidence had declined. So we are seeing a decline in confidence.
I'm also very concerned that there are some leading indicators that are going to further erode retirement savings, those being the effects of the economy on employment, as well as people dipping into their retirement savings. The reality is--
ADAM SHAPIRO: I had a very quick last question for you. Do you expect Congress to do anything to address the retirement process in this country?
CATHERINE COLLINSON: Yes, I do. And retirement-related legislation has a long history of bipartisan legislation, long-term working across the aisle. And that's encouraging. Senators Portman and Cardin have a bill. They go all the way back with the 2001 in EGTRRA, the Economic Growth and Tax Reconciliation Relief Act, if you can get that all out in a mouthful. A long history of policymakers working together to effect positive change. In some ways, that might be one of the few things that they actually agree on.
ADAM SHAPIRO: And retirement is the one thing that unites all of us because at some point, we're all headed there. We appreciate your being here, Catherine Collinson, CEO and president of Transamerica Institute and Transamerica Center for Retirement Studies. And a reminder that our retirement segments are brought to you by Fidelity Investments.