Helping boomers save for retirement

The retirement of the boomer generation and the generations that follow won't be like the retirement of their parents and grandparents, since approximately half of the American workforce does not have access to any kind of retirement savings plan at work.

Saving for retirement can be a source of anxiety for the 75 million Americans who don't have a traditional pension and don't have the opportunity to save for retirement through their jobs with a 401(k) plan.

To retire comfortably, the average American needs to replace about 70 percent of his or her annual income. When most individuals retire, 40 percent of that wage replacement comes from Social Security while another 30 percent will come from a 401(k) or IRA, from traditional savings and maybe even from working.

Nearly two-thirds of current retirees rely on Social Security for most of their income. Nearly half of all Americans age 65 and up would fall below the poverty line without it.

Proposed legislation known as the Automatic IRA Act of 2007 has been introduced in the House of Representatives by Richard Neal (D-Mass.) and Phil English (R-Pa.) and in the Senate by Jeff Bingaman (D-N.M.) and Gordon Smith (R-Ore.).

Auto IRAs will allow employees who do not have access to or are not eligible to participate in an employer's retirement plan to save for retirement through payroll deduction without the employer sponsoring the plan. Once the bills pass approximately half the workforce will be eligible to participate in an automatic IRA arrangement through an employer.

Americans can let their representatives know how they feel about this legislation.

This story is provided by North American Precis Syndicate Inc.