The U.S. Treasury’s Financial Literacy and Education Commission held a public meeting last week to discuss ways to improve the financial capability and security of young Americans.
The field hearing opened with remarks from Mary Miller, the undersecretary for domestic finance at the U.S. Treasury; Richard Cordray, the director of the CFPB; and Melissa Koide, the deputy assistant secretary for domestic finance at the U.S. Treasury.
During the first panel discussion, participants discussed challenges in retirement and changing retirement trends.
In her opening remarks, Judith Mares, the deputy assistant secretary at the Department of Labor’s Employee Benefits Security Administration and moderator of last week’s first panel discussion, pointed to a changing retirement planning landscape in which few young people will have access to pensions, which have traditionally been considered a key element—next to individual savings and Social Security—in planning for retirement.
“Individual savings through defined contribution plans and through individual retirement accounts is the majority of retirement savings today, which changes the character of decision-making for those who are saving because so much of the decision-making is based on their choice—their choice of how much to save, how to invest and learning how to translate that to income in retirement,” Mares said.
Mares said that while young people typically rely on their parents for financial advice, their parents often lack the financial know-how to teach them money skills. She also said young people do not factor Social Security into their retirement plans because they do not expect to receive Social Security.
In testimony before the committee, Lisa Mensah, the executive director of The Aspen Institute who helped lead the think-tank organization’s Savings for Life initiative, said an emphasis on savings across a lifetime is critical in helping young people develop the skills and acquire the knowledge necessary to ensure their financial security.
She said, however, that the process of saving individually for different goals should be simplified to make the process “more automatic” for consumers, touting the Treasury’s pilot MyRA starter retirement savings account.
The hearing also included discussion on research related to early financial education. Amias Gerety, the acting assistant secretary for financial institutions at the U.S. Treasury, ended the hearing with closing remarks.
Established under the 2003 Fair and Accurate Credit Transactions Act, the commission, which is currently chaired by Treasury Secretary Jack Lew, was responsible for developing MyMoney.gov—a national financial education website. The heads of 19 federal agencies serve as members of the commission.