As Pennsylvanians fail to save for retirement, state coffers could face new challenges
About 44 percent of Pennsylvania workers age 18 to 64 in the private sector work for businesses that do not offer a retirement plan, according to AARP data.
That’s one of the factors in a looming retirement crisis that will likely force millions of the state’s residents to accept a lower standard of living as they reach retirement age. And low retirement savings could have an impact on the state’s already pinched coffers.
Retirement issues will be the focus of a public hearing from 9 a.m. to noon Friday at the Allegheny County Courthouse and hosted by the state Treasury Department.
Friday’s hearing, the second of three, will include expert testimony from researchers at the Washington, D.C.-based Pew Foundation on the barriers impeding private employers from establishing workplace 401(k) plans to help employees build a nest egg.
“There are 2.1 million Pennsylvania residents with no access to a workplace retirement savings plan,” said state Treasurer Joe Torsella. “One of three Pennsylvanians have not a single dollar saved for retirement outside of what they will receive for Social Security.”
A task force of state legislators, business people and government officials is studying what the commonwealth will be facing in years to come.
Employees of larger companies are more likely to have a workplace retirement plan than workers of smaller ones. The probability of having an employer-sponsored retirement plan also differs considerably by workers’ earnings level, education, andrace and ethnicity.
However, the lack of ability to participate in an employer-provided retirement plan spans all levels of education and earnings and cuts across all groups.
“For a small business to offer a 401(k) can be challenging and burdensome,” Mr. Torsella said. “But we know that if employees don’t save [for retirement] directly out of their paychecks, they probably are not saving.”
He said the first hearing Oct. 26 in Allentown gave officials a good sense of the dimensions of the problem. The third and final hearing Jan. 25 in Harrisburg is meant to identify solutions.