ARLINGTON, VA, (October 10, 2013) – New research published by the American Society of Pension Professionals & Actuaries (ASPPA) shows that if Congress and the Administration fail to raise the debt ceiling, American workers’ 401(k) account balances could fall by more than 20%.
“As if the uncertainty of this all too familiar crisis weren’t enough for America’s workers and retirees, the real tragedy is in allowing their retirement security to become another casualty of political failures by Congress and the Administration,” said ASPPA’s Executive Director and CEO, Brian Graff. “We encourage all American savers to go to SaveMy401k.com and tell Congress and the Administration to stop playing political games with their retirement security.”
The analysis was conducted to determine the economic impact of the debt limit debate in the summer of 2011 and the economic implications for another standoff in 2013. According to the study, the uncertainty surrounding the debt ceiling fight of mid-2011 seriously disrupted the economy, shrank total private pension assets and slowed the nation’s economic recovery. The study warns that the impact of new debt ceiling uncertainty on private retirement savings could be similarly catastrophic this fall.
Retirement savings totaled $20.8 trillion at the end of the first quarter of 2013. Private retirement savings accounted for more than half of all retirement savings, with nearly $11.1 trillion in employer-based defined contribution plans and individual retirement arrangements. These retirement assets are held in investments that will undoubtedly respond to the overall economic and financial consequences of debt limit negotiations. According to ASPPA’s research, failure to raise the debt ceiling this fall could reduce the value of retirement savings by more than 20 percent – that would mean over $2 trillion lost from private employer-based defined contribution plans and IRAs.
ASPPA strongly encourages Congress and the White House to keep working Americans’ retirement plans in mind and act quickly to resolve the debt ceiling debate. Extending the conflict could unnecessarily risk America’s retirement security.
Read ASPPA’s research, “Retirement Savings Will Suffer if Congress
Does Not End the Budget and Debt Ceiling Stalemate,” here.
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