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April 14, 1999: Providing a New Opportunity to Save

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I believe strongly that all Americans must save for the future -- and that all Americans deserve the chance to do exactly that. Today, therefore, I am putting forth my full proposal for Universal Savings Accounts -- USA Accounts -- a complete and comprehensive new plan to help all Americans achieve retirement security in the 21st Century.

President Bill Clinton
April 14, 1999

Today, at the White House, President Clinton announced his plan to provide Americans with Universal Savings Accounts (USAs). These accounts will provide 124 million Americans with the opportunity to build wealth and to save for their retirement through a progressive new tax cut.

Too Few Americans Have Additional Savings. Because Americans are living longer, it is more important than ever for them to build wealth for a secure retirement. Currently, over two-thirds of Americans rely on Social Security as their principal source of retirement income, and 18 percent rely on Social Security as their only source of income. Too few Americans are saving for their retirement. The typical family headed by someone 55-64 years of age has financial assets worth only $32,000.

A Plan That Strengthens Private Savings and Pensions. President Clinton believes that Social Security reform needs to be complemented with actions to strengthen private savings and private pensions. Social Security reform will ensure that this system remains a rock-solid foundation for retirement security. USAs will give working American families the opportunity to save for a secure retirement. Under this new program, 73 million people who do not participate in employer-provided pension plans would qualify for USAs, as well as 51 million people with pensions.

A Progressive Approach to Retirement Savings. USAs provide a progressive approach for retirement savings for the majority of working Americans. The current tax system provides 66 percent of the tax benefits for pensions and retirement savings to taxpayers with incomes of approximately $100,000. In contrast, the USA proposal would provide 80 percent of its benefits to families with incomes below $100,000. USAs make the tax system more progressive by providing the most generous tax breaks for low- and middle-income workers, who are the least likely to have access to employer pensions and who have the most difficult time saving. USAs work in the following way:

  • 98 million adults would receive an automatic government contribution to their USA every year.
  • In addition to the automatic contribution, the government would match, dollar for dollar, voluntary contributions to the USAs by low- and moderate-income workers. Eligible workers with higher incomes would have a match rate of at least 50 percent.

Making Additional Retirement Savings Universal. Each spouse in a married couple with family earnings over $5,000 and adjusted gross income of less than $100,000, who is between the ages of 18 and 70, will be eligible for a USA tax credit. Single taxpayers must have adjusted gross income below $50,000, and head of household filers must have income below $75,000. In addition, workers with higher incomes who do not have pension coverage are eligible for an account.

Helping Families Meet Their Retirement Needs. USAs give working families an opportunity to build wealth and save for retirement:

  • A married couple who participates for 40 years could accumulate over $253,680 in today's dollars -- enough to produce $20,121 a year of after-tax income in retirement.
  • A couple earning $40,000 would automatically receive $600 of tax credits deposited into their accounts, even if this family contributed nothing to their accounts. After 40 years, with only automatic contributions, their accounts would total $76,104 (in today's dollars) and provide $6,036 a year of after-tax retirement income.

Presidential Leadership to Help Americans Save. President Clinton is committed to providing Americans with secure retirement savings. The President will work with Congress to make USA accounts available to every American.

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