House Committee on Education and Labor
U.S. House of Representatives

Turmoil in the U.S. and global financial markets has impacted all aspects of American life, but for many workers and retirees, the most pressing concern remains the health of their retirement savings. Today’s hearing is an important opportunity to evaluate the issue of retirement security in the context of the current market downturn as well as more broadly, through the lens of long-term market fluctuations.

Although the stock market – a common barometer of consumer confidence and market health – has been trending downward for the past year, it is the volatility of the past several weeks that has truly shaken investors and savers.  Uncertainty arising from the credit crunch and global banking shifts has brought both upward and downward market spikes of historic proportions.

The market also reacts to the signals sent by policymakers, so another fitting question to ask today might be: what is the impact of congressional action on workers’ retirement security?  We’ve seen how the markets react to congressional votes, hearings, and even a few words uttered in haste.  What is said here today – by both the witnesses and by Members of Congress – will impact the market, a reality of which we must be mindful.  Congress should not be undermining public confidence; to do so could further erode an already fragile market.

American families are hurting.  Nest eggs have grown smaller, defined-benefit pensions have become less solvent, and workers nearing retirement have begun to reevaluate whether they can truly afford to stop working.  No one underestimates the seriousness of the current market situation.

However, the difficult reality we face today is merely a snapshot in the long-term retirement strategy employed by individuals, employers, and policymakers.  When the market was at its peak and workers reaped the benefits of consistent double-digit increases in their retirement portfolios year after year, no one would have advised that low-risk, low-return investment options be eliminated.  Similarly, despite the market losses we see today, it would be unwise to abandon the retirement savings vehicles now available to workers in favor of a one-size-fits-all government mandate that would cement individual losses and prevent future market gains.

In the midst of what many see as a short-term retirement security crisis, now is exactly the wrong time to consider a radical shift in how Americans plan and save for retirement.  Instead, we should look carefully, thoughtfully, and cooperatively at long-term strategies that will benefit workers by averting unnecessary risk while maintaining freedom and flexibility.

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