The U.S. Budget – What Will It Mean for Retirement Programs?

Earlier this week, I was fortunate to attend the “Retirement Income Summit” offered by Investment News. Sessions at the Summit included the expected topics: investments, taxes, client behavior, insurance, retirement strategies, etc. One of the sessions I found extremely informative was the Washington Insider’s View, presented by Jamey Delaplane of Davis & Harmon, a D.C. law firm I remember from my early actuarial career as very involved in helping insurers understand and implement tax strategies on behalf of the insurers they worked for and the clients served by those insurers. It’s hard to avoid talk about federal spending these days, and much of Jamey’s presentation revolved around the retirement implications of the upcoming federal budget discussions.  Jamey referenced a survey by Matthew Greenwald & Associates on behalf of the National Institute on Retirement Security.  That survey found that “nearly 80% of Americans believe leaders in Washington do not understand how hard it is to prepare for retirement in this economy. Some 83% say government should make it easier for employers to offer pensions, and 81% believe that Washington leaders need to give a higher priority to ensuring more Americans can have a secure retirement.” On the other hand, Jamey noted that with the current budget status, there are “no sacred cows”.  On the table are the mortgage interest deduction, reductions in the tax incentives to save for retirement and life insurance and annuity cash value accumulations, and of course Social Security and Medicare.  With respect to many of these tax benefits, he noted that many of the discussions focus on “upper income” Americans, with the possibility of phaseouts, additional taxes, and/or means testing. He described the upcoming debt ceiling vote as...