Delaware is home to a growing influx of people age 50-plus who want to enjoy their next chapter of life. They seek out the state’s beaches, great restaurants and access to major metropolitan cities. They believe their futures are financially sound in the First State, and that they will have a high quality of life. But this burgeoning population has something to worry about — a loophole in the law that could be sapping up to five years’ worth of their retirement income.
Retirement accounts and 401(k) plans often involve complex financial decisions, and many working people rely on investment professionals for guidance. We should be able to trust our financial advisers to put our interests first. Many investment professionals do so, but this legal loophole is allowing some on Wall Street to take advantage of hardworking Americans by recommending riskier investments with higher fees and lower returns, all to make higher profits for themselves.
According to one estimate, the loophole is costing American workers up to $17 billion in retirement savings every year. For many, there isn’t time to make up the loss.
The U.S. Department of Labor is considering an update that would hold anyone who gives investment advice to a “best interest” standard. Retirement advisers would be required to abide by this “fiduciary”standard — putting their clients’ best interest before their own profits.
Unfortunately, some Wall Street special-interest groups are lobbying Congress to try to stop this rule change. But it’s the special interests that need to change. The current loophole allows a few bad-acting banks, brokers and insurance agents to enrich themselves.
Hard-working Americans often pay the price with loss of retirement income. It’s time to close this loophole and ensure a high standard that holds anyone who gives financial advice to retirement savers genuinely accountable for helping millions of Americans choose the best investments for themselves, their families, and their futures.
Few can live on Social Security alone, and pensions are largely a thing of the past. That’s why investments and savings are so vital to our financial health as we venture into life after age 50.
Delawareans are counting on their congressional delegation to close the loophole now so they can fully enjoy their retirement years, which they’ve worked so hard to reach.
AARP Delaware State President