Bill Overview
Title: Retirement Savings Modernization Act
Description: This bill specifies that fiduciaries for employee-sponsored retirement plans are permitted to diversify a plan's investments across certain asset classes, such as digital assets, hedge funds, private equity, and venture capital.
Sponsors: Sen. Toomey, Patrick [R-PA]
Target Audience
Population: People with employee-sponsored retirement plans
Estimated Size: 100000000
- The bill targets individuals who are part of employee-sponsored retirement plans, which includes a large segment of the working population.
- These plans cover workers across various sectors and industries, particularly those with employer-provided benefits.
- Globally, the number of people with access to such retirement plans is expanding as more countries develop retirement savings initiatives.
Reasoning
- The Retirement Savings Modernization Act primarily affects individuals with employee-sponsored retirement plans. This encompasses a diverse range of professionals from various industries who rely on such plans for their future financial security.
- While the policy seeks to broaden investment avenues for these retirement plans, the direct impact on individuals' wellbeing may vary depending on factors such as their risk tolerance, investment knowledge, and access to financial advice.
- Younger individuals or those more familiar with digital assets may perceive this policy more positively, seeing it as an opportunity to enhance their retirement portfolio's growth.
- Older individuals closer to retirement age may view the increased investment options with caution, preferring the traditional stable asset classes like bonds or mutual funds due to lower risk levels.
- Populations without direct exposure to employee-sponsored retirement plans or those not participating actively in managing their retirement savings (e.g., having a financial advisor) might not feel a notable impact.
Simulated Interviews
Software Engineer (San Francisco, CA)
Age: 28 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 12/20
Statement of Opinion:
- I'm excited about the new investment options. I've been wanting to diversify my retirement portfolio beyond traditional stocks and bonds, especially into digital assets.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 6 |
Financial Analyst (Chicago, IL)
Age: 52 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- I'm wary of these changes. While diversification is generally good, the inclusion of high-risk assets makes me nervous about the volatility they might bring.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 7 | 8 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 6 |
Entrepreneur (Austin, TX)
Age: 34 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- This act could provide new avenues for growth, which align with my investment strategy that already includes unconventional assets.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 8 | 5 |
Marketing Manager (New York, NY)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- As long as my financial advisor maintains discretion over my investments, I'm comfortable with the changes, though I am unlikely to actively select high-risk assets myself.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 5 |
Retired (Miami, FL)
Age: 59 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- I don't see how this is relevant to me anymore since I'm not actively investing for retirement, but it might have been too risky for me closer to retirement.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Teacher (Denver, CO)
Age: 39 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- The new asset options seem too volatile for my taste. I prefer a stable, predictable return on my investments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 4 | 4 |
| Year 20 | 4 | 4 |
Tech Start-Up Specialist (Seattle, WA)
Age: 31 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 6/20
Statement of Opinion:
- The policy is great for someone like me who enjoys taking calculated risks. Emerging investment options are exactly what I look for.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 6 |
Human Resources Manager (Atlanta, GA)
Age: 44 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- I prefer to stick with what I know—simple, low-risk investments. This policy makes me uneasy about potential risks.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Construction Supervisor (Philadelphia, PA)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 8/20
Statement of Opinion:
- I don't intend to change my investment strategy with this bill. It's too late in my career to gamble with retirement funds.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 4 | 4 |
| Year 20 | 4 | 4 |
Research Scientist (Boston, MA)
Age: 26 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 9/20
Statement of Opinion:
- This might be interesting as I learn more about investing. For now, I'll stick with safer options until I'm more knowledgeable.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 5 |
Cost Estimates
Year 1: $50000000 (Low: $25000000, High: $75000000)
Year 2: $51000000 (Low: $25500000, High: $76500000)
Year 3: $52020000 (Low: $26010000, High: $78030000)
Year 5: $54080800 (Low: $27040400, High: $81121200)
Year 10: $59424888 (Low: $29712444, High: $89137332)
Year 100: $146379491 (Low: $73189745, High: $219569236)
Key Considerations
- The policy encourages diversification which could lead to better risk-adjusted returns in retirement portfolios.
- Complexity in managing and understanding new asset classes could pose risks to less sophisticated investors.
- Implementation will require significant updates to the current regulatory framework to cover non-traditional assets.