Vanguard takes a stand for retirement investors

November 11, 2019

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Tim Buckley

Tim Buckley
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Retirement, and how people prepare for it, has changed dramatically since Vanguard came into being more than four decades ago. Employer-provided pensions have been on a steady decline. Life expectancy has generally increased. Taken together, these developments mean that many investors need to save more for retirement than they currently are.

What hasn't changed for Vanguard is our support of efforts to help investors achieve their financial goals for retirement. Whether it's expanding access to retirement plans, encouraging people to save more, or providing savings to investors from reduced administrative costs, we take seriously our purpose of giving investors the "best chance for investment success."

A recent example is Vanguard's support of provisions to expand access and increase savings within the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, which was passed in May by the U.S. House of Representatives and is under consideration in the Senate.

"We believe all Americans should have a retirement system that puts their interests first," said Tim Buckley, Vanguard's chairman and chief executive officer. "We're actively engaged in transforming the investing landscape to make it fairer, more affordable, and easier for all investors to navigate."

Advocating for retirement savers

In keeping with that mandate, Vanguard participated throughout the process of developing the SECURE Act. A number of the act's provisions should significantly benefit investors.

For one, the act would make it easier for workers to save more of their paychecks for retirement automatically. It also would help small employers more easily afford the costs of offering retirement plans to their employees.

"The SECURE Act provides a solid framework for helping more Americans adequately prepare for their financial needs after they've left the workforce," Buckley said. "Vanguard will continue to advocate for policies that bring retirement security to greater numbers of savers and investors."

We were pleased to see that the act proposes to increase the mandatory age for required minimum distributions (RMDs—a mechanism that forces investors to liquidate part of their retirement savings, and therefore pay any applicable tax). The RMD triggering age would increase to 72, from the current 70½. Vanguard believes deferring taxes is an effective method for maximizing investment growth; so even a 1½ year increase to the age at which RMDs apply could benefit investors.

Where the bill had shortcomings, Vanguard advocated for improvements. No bill this comprehensive is perfect, and Vanguard has been pleased to take a stand for investors—ensuring that their best interests are heard and understood.

Overall, we view the strong bipartisan support for the SECURE Act as a crucial development, and an important step toward addressing many of the broad economic implications of an aging population. Vanguard will continue to engage with policymakers and work in partnership with employers and individual investors to make saving for retirement easier and more accessible.

Note: All investing is subject to risk, including the possible loss of the money you invest.