Solving the Retirement Puzzle

The growing recognition that millions of Americans are ill-prepared for retirement has prompted a number of state and federal policy proposals to promote retirement security. Yet even the most promising proposals fail to acknowledge a prerequisite to sustaining long-term savings: access to flexible resources that can be tapped in an emergency or can support productive investments that can pay off over the long haul. One recently announced effort – the Obama Administration’s myRA program – is designed to facilitate access to a savings vehicles for the mostly low- and middle-income Americans who miss out on current savings opportunities. As currently designed, the program is unlikely to have a significant impact at scale on the long-term prospects of this group of workers. But with certain adjustments and policy reforms, myRAs could facilitate the creation of personal safety nets that would both provide short-term financial stability and lay the foundation for a secure retirement. Short-term, flexible savings are a crucial but overlooked piece required to solve the retirement puzzle.