President Obama's Retirement Initiatives Fall Short

Sept. 8, 2009 — -- Like it or not, President Obama's plan to overhaul health insurance can safely be described as ambitious.

The same cannot be said for his efforts so far to improve the retirement finances of American workers.

Over the Labor Day weekend, the president announced several initiatives designed to make it easier for Americans to save for retirement. Individually, each of the changes makes sense and should help in small ways.

But as a whole, the package left me underwhelmed. 'That's all?' I thought as I reviewed the details of the initiative released by the White House.

There was no proposal to overhaul 401(k) accounts that many in the personal-finance field believe is necessary. Nor was there a call to shore up Social Security. And nowhere was there anything meant to address serious underfunding in many state and local government pension systems.

Instead, the president offered a series of small-rule changes that can be implemented by the Treasury Department and the Internal Revenue Service without the need for legislation requiring congressional approval.

Earlier, Obama had proposed to Congress a couple measures to help spur retirement savings.

One proposal would create automatic IRAs for workers who don't have an employer-sponsored retirement plan. Under this plan, affected workers would be enrolled automatically in an IRA funded by payroll contributions.

The second legislative proposal would expand an existing retirement savings credit for low- and middle-income workers.

These proposals await congressional action.

Again, they are nice ideas, but not anything too far reaching.

Here's a summary of what the president announced on Saturday that will take effect right away.