Work and Save. August 8, 2016

Transcription

1 Work and Save August 8, 2016

2 Households at Risk of Financially Insecure Retirement on the Rise Percent of Households at Risk of Not Having Sufficient Retirement Savings 60% National Retirement Risk Index, % 53% 52% 20% 31% 31% 30% 37% 38% 40% 38% 45% 44% 0% Source: Center for Retirement Research, National Retirement Risk Index

3 Average Household Has $3k Saved

4 Average Social Security Benefit Source: Official Social Security Website, Fact Sheet

5 55 Million Americans Lack Access ERISA introduced Source: NIRS, The Continuing Retirement Savings Crisis

6 The Power of Payroll Deduction Participation Rates 71.5% 4.6% Not covered by an Employer Plan Deductible IRA Only Covered by a Non-Auto Enroll Employer Plan Data compiled by AARP s Public Policy Institute from unpublished estimates from the Employee Benefit Research Institute of the 2004 Survey of income and Program Participation Wave 7 Topical Module (2006 data). See also Brookings' Retirement Security Project and Whitehouse.gov

7 Percent of Workers Whose Employer Does Not Offer a Retirement Plan 30 40% 40 50% 50 60% + 60% Source: AARP s Public Policy Institute

8 Budget Consequences According to a recent Utah study, the total cost to taxpayers for new retirees will top $3.7 billion over the next 15 years. This constitutes potential savings for taxpayers if we act now. Additional findings: 18% of retirees in the next 15 years will retire with more debt than savings. A 10% increase in net worth of the 1/3 least prepared for retirement will save taxpayers $194 million through Source: Notalyis

9 Billions of Dollars 529 s: A Precedent for State Action Jo $300.0 $250.0 Assets in 529 Plans Nationally (Billions) $227.1 $253.2 $247.9 $200.0 $190.7 $150.0 $129.9 $133.4 $157.4 $164.9 $100.0 $50.0 $- $105.7 $104.9 $82.5 $64.7 $45.8 $26.9 $2.4 $3.3 $3.9 $5.8 $9.3 $ Source: College Savings Plan Network

10 Solutions 5 essential ingredients that facilitate adequate retirement savings rates: availability automatic enrollment ease of investment automatic escalation lifetime income streams

11 Payroll Deduction Valued Across All Income Levels

12 Effect of Auto Enrollment on Participation Source: How America Saves: 2013 (Valley Forge, PA: Vanguard, 2013)

13 Various Models Discussed in States Studying Retirement Insecurity Feasibility Study Marketplace Voluntary IRA Auto IRA ERISA Plans/ DB features Utah Minnesota Washington* West Virginia Illinois* Wisconsin Virginia California New Jersey* North Dakota Oregon* Massachusetts** Vermont Connecticut Indiana Connecticut* New Hampshire Nebraska NYC Philadelphia Utah Maryland* New Jersey Kentucky Ohio California Colorado New Jersey New York * Legislation being implemented ** Massachusetts implementing a plan for small non profits Note- double listings are not mistakes, they reflect multiple bills under consideration Updated August 2016 Arizona Kentucky Rhode Island

14 Auto IRA vs. Marketplace Feature Illinois/ Oregon Model (Secure Choice) Washington Model Automatic IRA x Marketplace (Can include) x Requires access to payroll deduction for employees and provides access to automatic enrollment x Businesses are only required to provide information to employees and run x payroll deduction Provides plug-and-play plan option for small business owners that employers x don t have to manage Optional for employees x x Employee can chose which plan they want to offer x x ERISA plan Some, including SIMPLE Fee cap x x Public Private-Partnership x x

15 National Context 2012: Massachusetts passed plan for non-profits California passed feasibility study 2013: Oregon passed study of retirement security 2014: Minnesota and Connecticut each passed a feasibility study, appropriating $400k for the work Over a dozen states working on this concept nationwide. 2015: Illinois, Oregon and Washington Governors sign new laws Utah Senate and Virginia pass studies unanimously. 2016: New Jersey (R), Maryland (R) and Connecticut (D) Governors sign new laws California likely to pass second chamber this month Utah and passed bill in one house

16 A National Movement 2013 Work and Save

17 A National Movement: 25+ States Jo 2016 Work and Save

18 Small Businesses Support Work and Save Small business owners overwhelmingly agree that retirement benefits help recruit good employees Percent Strongly or Somewhat Agree Offering retirement benefits helps recruitment of good employees 82 I feel a responsibility to provide some kind of retirement benefits 73 It would be nice to offer a retirement benefit but it's too expensive Offering a retirement benefit helps my company's bottom line It would be nice to offer a retirement benefit but it's too complicated to 50 Data from NCPERS

19 Voters Support Work and Save Across Party Lines 2015 New Jersey Survey or Registered Voters Across party lines, eight in ten agree that elected officials should support a retirement saving plan and many would think positively of small businesses that offer a plan Agree or Disagree Elected Officials Should Support a New Jersey Retirement Savings Plan 11% Disagree 9% Neutral Agree by Political Party Democrat 85% Republican 79% 79% Agree Independent/Other 76%

20 National Media Attention

21 Questions? Sarah Mysiewicz Gill Senior Legislative Representative State Financial Security & Consumer Affairs AARP Additional Resources: AARP s Public Policy Institute State Retirement Savings Resource Center