Surging Dow, Strong Economy Add Value to Retirement Savings of Working Americans

Republican Pension Reforms Strengthen Momentum by Providing Workers

New Resources for Retirement Savings

WASHINGTON, D.C. – U.S. House Workforce Committee Chairman Howard P. “Buck” McKeon (R-CA) today underscored the positive impact a strong U.S. economy and surging stock market are having on worker retirement security.  McKeon singled out worker pension reforms enacted by Congress earlier this year as a critical step to continue this trend and provide workers even more resources to save and plan for a secure retirement.

“You cannot pick up a newspaper without reading some good economic news,” said McKeon.  “New jobs are being created, gas prices are plummeting, and the Dow has surged to historic highs.  Below the surface, the news gets even better.  A growing economy and strong market means the retirement savings plans of millions of working Americans increase in value each and every day.”

McKeon continued, “Thanks to congressional Republican efforts, it’s easier than ever for Americans to save for their retirement and gain access to professional investment advice to help them make their retirement savings decisions.  Not only do these reforms ensure workers’ retirement savings are there for them when they retire, but coupled with a strong economy, they’ve made millions of nest eggs even more valuable.”

McKeon pointed to a recent report from the Investment Company Institute (ICI) that showed the average 401(k) retirement savings plan has increased in value from $61,939 in 2002 to $102,014 in 2005 – nearly a 65 percent increase in value.  The median 401(k) has increased from $29,744 to $54,591 – a gain of 83.5 percent – during the same time period.  And according to the American Shareholders Association, as of yesterday’s close on Wall Street, $5.7 trillion of new shareholder wealth has been created since May 20, 2003, the day Congress reached an agreement on the latest round of tax cuts.  This represents nearly a 55 percent increase in shareholder wealth.   

To encourage even more retirement savings, the Pension Protection Act, signed into law in August, includes 401(k) auto-enrollment programs and permanently increases annual 401(k) and IRA contribution limits.  The legislation also fixes outdated laws to provide employees with access to a qualified investment advisor who can help them choose appropriate investments, while instituting tough safeguards to ensure employees are protected.

“Capitol Hill Democrat plans to raise taxes would not only derail our strong economy, but it would place at risk the retirement security of millions,” McKeon concluded.  “Republican tax cuts lifted us out of recession, carried us through 9/11, helped us create 6.6 million new jobs, and – indeed – have given us a strong market that has increased the value of worker retirement savings.  To reverse course would be not only bad economic policy but also a betrayal of working families saving for their golden years.”

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