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Saving more for retirement


AMERICANS aren't saving enough for retirement. It's a deeply troubling trend, especially because 76 million baby boomers will retire over the next 15 years.

That will put enormous pressure on the Social Security system, which was never envisioned as a full-fledged retirement program. Private savings and company pensions are supposed to sustain a retiree's standard of living.

Congress is looking at ways to boost retirement savings. A bill approved by the House Ways and Means Committee last week seeks to encourage workers to set aside more of their paychecks in IRA and 401(k) plans.

The bill, sponsored by Baltimore Democrat Ben Cardin and Republican Rob Portman of Ohio, increases the amount people with modest incomes can contribute to Individual Retirement Accounts - without paying taxes - from $2,000 annually to $5,000. Workers in 401(k) plans will be able to add $15,000 tax-free by 2006, instead of the current $10,500.

This bill also would make it easier for more small businesses to offer savings plans. That's a key element. Workers also would find it simpler to take their contributions with them when changing jobs. There's strong bipartisan support. The bill almost passed last year, but Senate Republicans balked at giving a Democratic president credit. That's not a concern this time.

When the full House votes tomorrow, easy passage is expected. Problems could develop in the Senate, though, on two fronts.

Some Republican leaders worry there may not be enough room in the president's final, slimmed-down tax-cut bill to include pension reform. Yet the cost of these changes is relatively small -$52 billion over 10 years, a fraction of the $1.3 trillion package likely to be approved. Reducing even this figure could be done without destroying this bill.

The other Senate concern is lack of tax incentives to encourage more workers to save for retirement. Senators must take care, though, because large tax credits could drive up the price.

Momentum is on the sponsors' side. It makes sense to encourage Americans to set up IRA and 401(k) accounts and deposit increasingly larger amounts.

We can't depend on Social Security benefits. We must become more self-reliant when it comes to preparing for our retirement days.

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