At a time in which President George W. Bush is facing firm attacks from Democrats seeking to take his job next November, the criticism has trickled down to the financial services industry, namely Principal Financial Group, the nations largest (401)k firm.
Bush is expected to nudge Lifetime Savings Accounts into his 2005 budget proposal, a blow to existing plans like 401(k), 403(b) and Simple IRAs.
Said Principal Financial President J. Barry Griswell in a statement yesterday: "LSAs target the wrong kind of savings. Because individual savers can withdraw money for any reason at any time with no penalty, investors will have little incentive to save long term for financial security at retirement."
The pending addition to his budget does not go as far as Bushs 2003 suggestion that 401(k) plans be discontinued in favor of another new vehicle, Employee Retirement Savings Accounts.
Those ERSAs, under Bushs plan, would have mirrored current 401(k) limits but possibly further lessened the need for employers and employees to set up retirement plans since much more money could be stashed away individually, like with LSAs.
Griswell added that the pending retirement of Baby Boomers and pending passing of LSAs would add to the looming retirement "crisis."