Many Cal­i­for­nia work­ers not sav­ing for re­tire­ment

The Fresno Bee (Sunday) - - Insight - BY DAR­RELL SMITH dv­[email protected]

Mil­lions of Cal­i­for­nia work­ers have no money saved for re­tire­ment, are do­ing lit­tle to catch up or are shut out of em­ployerof­fered sav­ings plans al­to­gether, a newly re­leased UC Berke­ley study shows.

“It turns out that Cal­i­for­nia pri­vate sec­tor work­ers are not merely be­hind on sav­ing for re­tire­ment; half do not own re­tire­ment assets and most are cur­rently not sav­ing for re­tire­ment at all,” wrote Nari Rhee, Re­tire­ment Se­cu­rity Pro­gram di­rec­tor at UC Berke­ley’s Cen­ter for La­bor Re­search and Ed­u­ca­tion. “With half of Cal­i­for­nia pri­vate sec­tor work­ers lack­ing re­tire­ment assets, the state is at risk of each gen­er­a­tion re­tir­ing less pros­per­ous than the last.”

It’s a loom­ing cri­sis, the study sug­gests, with po­ten­tial long-term con­se­quences for a gray­ing Cal­i­for­nia.

Sim­ply put, Rhee said in a news re­lease announcing her find­ings, “When it comes to re­tire­ment in­come se­cu­rity, most work­ing Cal­i­for­ni­ans are in trou­ble.”

Rhee based her find­ings on the Cen­sus Bureau’s Cur­rent Pop­u­la­tion Sur­vey and 2014 Sur­vey on In­come and Pro­gram Par­tic­i­pa­tion. The find­ings dove­tailed with the July 1 launch of CalSavers — the state’s automatic re­tire­ment sav­ings pro­gram for pri­vate sec­tor work­ers.

Pri­vate em­ploy­ers with five or more work­ers that do not of­fer 401(k) sav­ings plans or pen­sions must en­roll their work­ers in the state-spon­sored IRA.


Nearly half of the

state’s pri­vate sec­tor work­ers have no ded­i­cated re­tire­ment assets — in­di­vid­ual re­tire­ment ac­counts, em­ployer-pro­vided 401(k) plans, pen­sions or profit-shar­ing pro­grams.

And 54 per­cent of Cal­i­for­ni­ans ages 25-64 who work in the pri­vate sec­tor do not have a re­tire­ment ac­count of any kind or par­tic­i­pate in a pen­sion plan, ac­cord­ing to the find­ings.

The num­bers are more stark the fur­ther down work­ers are on the in­come scale. The study iden­ti­fies those em­ploy­ees in the bot­tom 40 per­cent of earn­ings as low-in­come work­ers. A full 75 per­cent of those work­ers had no nest egg other than So­cial Se­cu­rity, ac­cord­ing to the re­port.

The blame doesn’t rest solely at the feet of Cal­i­for­nia work­ers, Rhee says.

Rather, it is part of a deep­en­ing re­tire­ment cri­sis in Cal­i­for­nia decades in the mak­ing as fewer pri­vate sec­tor em­ploy­ers of­fer tra­di­tional pen­sion plans in fa­vor of 401(k)s or pro­vide re­tire­ment plans of any sort; and as work­ers have to wait longer to draw full So­cial Se­cu­rity re­tire­ment ben­e­fits. Full re­tire­ment age is 66 years, six months for those who turn 62 this year. Un­der cur­rent law, re­tire­ment age will tick up two months each year un­til it reaches 67.

To­day, fewer em­ploy­ees have ac­cess to work­place re­tire­ment sav­ing plans than two decades ago, ac­cord­ing to the study.

In 1997, roughly half — 49 per­cent — of work­ers in the pri­vate sec­tor had no ac­cess to a re­tire­ment plan through their work. By 2017, the percentage of em­ploy­ees with­out a work­place pen­sion or 401(k) plan had grown to 61 per­cent.

The domi­noes set in motion by a lack of re­tire­ment sav­ings are many, Rhee said: higher num­bers of im­pov­er­ished


se­niors trig­ger a greater de­mand for pub­lic as­sis­tance and the tax dol­lars to pay for it. More Cal­i­for­ni­ans with shrink­ing in­comes sig­nal eco­nomic and fis­cal prob­lems down the road.

The La­bor Cen­ter promised a deeper dive into how pre­pared work­ing Cal­i­for­ni­ans are for re­tire­ment in a later study, but CalSavers of­fi­cials say ev­i­dence is clear that work­ers and the busi­nesses that em­ploy them still have work to do.

“Ev­ery Cal­i­for­nian de­serves a chance to re­tire in dig­nity af­ter a life­time of work,” said Katie Se­len­ski, CalSavers’ ex­ec­u­tive di­rec­tor, in a state­ment. “This study un­der­scores how far we have to go to get there.”

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