Senator Rubio’s surprisingly bipartisan retirement saving idea

Senator Marco Rubio (R-Florida)

Senator Marco Rubio (R-Florida)

When Republican politicians talk about how important Social Security and Medicare have been for their parents, it’s time to grab your wallet. These stories usually precede a proposal to cut benefits under the guise of “saving” the programs – and Senator Marco Rubio of Florida tore a page from that playbook this week.

Rubio, a likely 2016 presidential candidate, began a major speech on retirement policy this week by recalling the importance of Social Security and Medicare to his immigrant parents. “They never earned enough to have significant savings or a pension,” he said. “It was Social Security and Medicare that allowed them to retire with comfort and security.”

Rubio then called for cutting Social Security benefits via a higher retirement age, and shifting healthcare cost risk to seniors by “voucherizing” Medicare. Both are standard-issue ideas for any Republican who wants to be taken seriously by the party these days. And both would spell disaster for an aging America already facing a huge shortfall in retirement resources.

But then Rubio did something bipartisan: He called for a government-sponsored 401(k)-style retirement savings option for working Americans who don’t have such a plan. That sounds a lot like a government solution to one of our most pressing retirement security problems: the relatively low – and declining – level of access to 401(k) plans.

Rubio called for opening up the federal Thrift Savings Plan (TSP) to private-sector workers. That’s an idea Democrats and progressive think tanks have proposed, since the TSP might just be the country’s best-run defined contribution plan. The TSP boasts very low costs, a short and easy-to-understand set of investment choices and options to convert savings into an annuity stream at retirement via a third-party insurance company.

Rubio’s arguments for whacking social insurance programs deserve to go nowhere. But his pitch to open up the TSP should appeal to progressives interested in cutting the cost of retirement saving, and to conservatives who want to stress the importance of individual responsibility. Learn more at Reuters Money; video of Rubio’s speech is below.