We read with interest the recent editorial in this newspaper, "Retirement crisis looming without personal savings" (March 17), as AARP is very concerned about future generations having enough means to live on in retirement. We agree that the current statistics are grim: in Utah alone, 52.6 percent of private sector workers don’t have a way to save for retirement at work, a figure that represents over 500,000 people. The average 401(k) balance for Utah workers in 2012 was $26,756, barely enough to cover a few years of retirement expenses even when combined with Social Security income and savings from other sources.
In response to this looming crisis and other compelling factors (such as not having taxpayers shoulder the burden of ensuring that retirees have their basic needs met through safety net programs) Senator Todd Weiler (R-District 23) sponsored SJR 9 in last year’s legislative session that “strongly urges Utah’s workers and business community to join with the legislature to study and develop a model for saving for retirement through the small business workplace that is accessible to the workers of Utah and consider legislation, if needed, to put the plan into action.”
This resolution led to creation of a working group comprised of organizations such as Fidelity Investments, the Salt Lake Chamber of Commerce, the Utah Bankers Association, the Utah Educational Savings Plan, the AFL-CIO and the Vest Pocket Business Coalition that met throughout 2015 to review various models for developing retirement saving vehicles through work. Small business concerns were addressed, as were policy decisions on how to keep costs low, create incentives, and promote participation. The group decided that the best way to proceed was to start simple: The state should find the best vendor(s) for retirement plans, with participation by small businesses voluntary. The advantages of a small business retirement savings program administered by that state were, among other things, to promote self-reliance and financial freedom, help businesses compete while reducing their administrative burden, save taxpayer dollars, and create a self-sustaining plan.
Senator Weiler was again the champion for such a plan in this year’s legislative session, sponsoring SB 133 that incorporated the working group’s suggestions. The bill passed by a wide margin in the Senate but was tabled by the House committee to which it was assigned, thus effectively killing it.
Yet we know there is clear evidence that saving for retirement through work would go a long way toward helping people be financially responsible. In 2014, AARP conducted a survey of Utahns age 25-64 years old and found that while the overwhelming majority—85 percent—wish they were able to save more money for retirement, 40 percent had no money left after paying bills, nearly one-third reported that paying off debt was an obstacle to saving for retirement and a quarter had either themselves or their spouse lose a job or had a pay cut. One quarter also reported a major health issue that prevented them from saving for retirement. While it is true that some of those with debt may have overextended themselves financially, the combination of mortgage payments, car payments, health insurance payments and other fixed expenses creates a heavy financial burden on low-to-middle class workers who have seen wages stagnant over the last several years. The survey also found that nearly one-third stated that not having a retirement savings plan at work was an obstacle to saving.
These findings are not unique. The Employee Benefit Research Institute (EBRI) found that half of baby boomers and Generation X-ers are at risk of financially insecure retirement, but that 88 percent of respondents in a survey they conducted indicated that it was important to be able to have their own retirement savings plan contributions automatically deducted from their paychecks. EBRI also found that participation rates for those covered by an employer plan were 16 times higher than those not covered by an employer plan.
As the editorial from this paper notes, Americans face a retirement crisis. A solution to help avoid this crisis is available and was vetted by a broad coalition of interested parties. AARP Utah was very disappointed that SB 133 was not enacted into law this year, but will be back to advocate for passage of a similar bill next year. The crisis will not go away unless reasonable actions are taken to help ensure retirement security for future generations.
Alan Ormsby is the State Director for AARP Utah, which represents 212,000 members in the state.