Re­port: Most work­ing Amer­i­cans not sav­ing for re­tire­ment

Pawtucket Times - - BLACKSTONE VALLEY - Herb Weiss, LRI’12, is a Paw­tucket writer cov­er­ing ag­ing, health­care and med­i­cal is­sues. To pur­chase Tak­ing Charge: Col­lected Sto­ries on Ag­ing Boldly, a col­lec­tion of 79 of his weekly com­men­taries, go to www.herb­weiss. com.

Less than four months ago, a re­search re­port re­leased by the Wash­ing­ton, D.C.-based Na­tional In­sti­tute on Re­tire­ment Se­cu­rity (NIRS), us­ing an anal­y­sis of U.S. Cen­sus data, found that even with the na­tion’s eco­nomic re­cov­ery, sav­ings lev­els of work­ing age Amer­i­cans are in­ad­e­quate for Amer­ica’s re­tirees to rely on.

The NIRS re­port pro­vides an­a­lyzes the U.S. Cen­sus Bureau’s Sur­vey of In­come and Pro­gram Par­tic­i­pa­tion data re­leased in 2016 and 2017. Re­searchers took a look at work­place re­tire­ment plan cov­er­age, re­tire­ment ac­count own­er­ship, and re­tire­ment sav­ings as a per­cent­age of in­come, and es­ti­mates the share of work­ers that meet fi­nan­cial in­dus­try rec­om­mended bench­marks for re­tire­ment sav­ings.

“The facts and data are clear. Re­tire­ment is in peril for most work­ing-class Amer­i­cans,” says Diane Oak­ley, the re­port author and NIRS ex­ec­u­tive direc­tor in a state­ment. “When all work­ing in­di­vid­u­als are con­sid­ered — not just the mi­nor­ity with re­tire­ment ac­counts — the typ­i­cal work­ing Amer­i­can has zero, zilch, noth­ing saved for re­tire­ment,” she says.

Oak­ley added, “What this re­port means is that the Amer­i­can dream of a mod­est re­tire­ment af­ter a life­time of work now is a mid­dle-class night­mare. Even among work­ers who have ac­cu­mu­lated sav­ings in re­tire­ment ac­counts, the typ­i­cal worker had a low ac­count bal­ance of $40,000. This is far off-track from the sav­ings lev­els Amer­i­cans need if they hope to sus­tain their stan­dard of liv­ing in re­tire­ment.”

Amer­i­can’s Not Pre­pared for Fi­nan­cially Sur­viv­ing Re­tire­ment Years

Find­ings in NIRS’s 32-page re­search re­port, “Re­tire­ment in Amer­ica: Out of Reach for Most Amer­i­cans?,” re­leased on Septem­ber 18, finds that more than 100 mil­lion work­ing age in­di­vid­u­als (57 per­cent) do not own any re­tire­ment ac­count as­sets, whether in an em­ployer-spon­sored 401(k)-type plan or an IRA nor are they cov­ered by de­fined ben­e­fit plans. Re­searchers say the data in­di­cated that “those who do own re­tire­ment ac­counts have, on av­er­age, more than three times the an­nual in­come of in­di­vid­u­als who do not own re­tire­ment ac­counts.”

Ac­cord­ing to the re­search find­ings, the typ­i­cal work­ing age Amer­i­can has no re­tire­ment sav­ings. When in­clud­ing all work­ing in­di­vid­u­als — not just in­di­vid­u­als with re­tire­ment ac­counts—the me­dian re­tire­ment ac­count bal­ance is $0 among all work­ing in­di­vid­u­als. For the typ­i­cal work­ers who have re­tire­ment sav­ings ac­counts, these in­di­vid­ual only had a mod­est ac­count bal­ance of $40,000. “Fur­ther­more, some 68 per­cent of in­di­vid­u­als age 55 to 64 have re­tire­ment sav­ings equal to less than one times their an­nual in­come, which is far below what they will need to main­tain their stan­dard of liv­ing over their ex­pected years in re­tire­ment,” say the NIRS’s re­search re­port.

The re­search study find­ings in­di­cate that 77 per­cent of Amer­i­cans can­not meet con­ser­va­tive re­tire­ment sav­ings goals f or their age and in­come-lev­els based on work­ing un­til age 67 even af­ter count­ing an in­di­vid­u­als’ en­tire net worth. “Due to a long-term trend to­ward in­come and wealth in­equal­ity that only wors­ened dur­ing the re­cent eco­nomic re­cov­ery, a large ma­jor­ity of the bot­tom half of Amer­i­cans can­not meet even a sub­stan­tially re­duced sav­ings tar­get,” says the NIRS re­port.

The re­searchers say that fed­eral and state poli­cies can as­sist Amer­i­cans in ac­cu­mu­lat­ing re­tire­ment in­come by strength­en­ing the na­tion’s Social Se­cu­rity pro­gram, by states ex­pand­ing ac­cess to low-cost, high-qual­ity re­tire­ment plans, and help­ing low-in­come work­ers save. “States across the na­tion are tak­ing key steps to ex­pand ac­cess to work­place re­tire­ment sav­ings, with en­roll­ment in state-based pro­grams this year start­ing in Ore­gon, Wash­ing­ton and Illi­nois. Other pro­pos­als to ex­pand cov­er­age are on the na­tional agenda but uni­ver­sal re­tire­ment plan cov­er­age has not be­come a na­tional pri­or­ity. Fi­nally, ex­pand­ing the Saver’s Credit and mak­ing it re­fund­able could help boost the re­tire­ment sav­ings of lower-in­come fam­i­lies,” notes the NIRS re­port.

As­sist­ing Rhode Is­lan­ders to Save for Re­tire­ment

In 2016, AARP Rhode Is­land re­lease a sur­vey of 459 Rhode Is­land small busi­ness own­ers (with up to 100 em­ployee) to de­ter­mine their thoughts about em­ployee re­tire­ment bene- fits. Over­whelm­ing, these busi­ness own­ers see a need for law­mak­ers to cre­ate a pro­gram to help work­ing Rhode Is­lan­ders to save for their re­tire­ment years.

Ac­cord­ing to the AARP tele­phone poll find­ings of the small busi­nesses, 76 per­cent say Rhode Is­lan­ders need a lot, some more en­cour­age­ment to save for re­tire­ment. A whop­ping 82 per­cent agree that state law­mak­ers should sup­port small busi­ness own­ers to of­fer em­ploy­ees a way to save.

Seventy-six per­cent of the re­spon­dents agree to be­ing able to of­fer a vol­un­tary, por­ta­ble, re­tire­ment plans will pro­vide them with a com­pet­i­tive edge to at­tract or re­tain em­ploy­ees, notes the poll’s find­ings.

Most small busi­ness owner re­spon­dents called on the Rhode Is­land Gen­eral Assem­bly to sup­port state leg­is­la­tion to cre­ate a ba­sic, ready-togo, pri­vately-man­aged re­tire­ment plan for em­ploy­ees. The ma­jor­ity of small busi­ness own­ers who par­tic­i­pated in the AARP Rhode Is­land sur­vey agree that state law­mak­ers should sup­port a plan to make it eas­ier for small busi­ness own­ers to of­fer their em­ploy­ees a way to save for re­tire­ment.

In 2016, the Rhode Is­land Gen­eral Assem­bly con­sid­ered AARP Rhode Is­land’s so-called Work & Save leg­is­la­tion to as­sist work­ing Rhode Is­lan­ders save for their re­tire­ment years by es­tab­lish­ing a Pri­vate Em­ployer IRA Pro­gram. But, with spi­ral­ing state deficits and the ad­min­is­tra­tive costs of the pro­gram, the leg­is­la­tion was held for “fur­ther study” im­me­di­ately killing the leg­is­la­tion.

With Amer­ica’s ag­ing pop­u­la­tion, with many not hav­ing ad­e­quate re­tire­ment sav­ings, Congress must move to strengthen the Social Se­cu­rity pro­gram. But, the Rhode Is­land Gen­eral Assem­bly must look for ways to ex­pand ac­cess to work­place re­tire­ment sav­ings through a state-based pro­gram. Not do­ing so may ul­ti­mately in­crease the state’s role in pro­vid­ing as­sis­tance to an in­creas­ing per­cent­age of low-in­come older Rhode Is­land.

HERB WEISS Senior Beat

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