April is Financial Literacy Awareness Month – It’s Time to Learn More about Idaho’s Retirement Savings Crisis

Tucker, Jeannie - JTTucker

Much is being made in the Idaho legislature right now about the state’s fiscal surplus and the challenges we face righting our state economy as we exit the worst part of the pandemic. In addition to these challenges, another predicament looms on the horizon in the form of a retirement savings crisis. The pandemic has all but exposed what we already knew about the lack of retirement savings of Idahoans across the state.

$19,000 is the average annual Social Security payment for Idaho retirees. Social Security was never intended to be a person’s sole source of income in retirement, yet in 2020, nearly one in four older Gem State citizens relied on Social Security for 90% or more of their income.¹ Currently, the average worker has a meager $2,500 saved for retirement and that number only jumps to $14,500 for workers nearing retirement.²

Compounding the retirement savings crisis is that Idaho’s population is rapidly aging. According to a February 2021 Georgetown University report, Idaho’s elderly population will grow 39% by 2040 totaling more than 411,000 residents. In addition, there will be fewer working age households to support this ever-growing population. If such a large percentage of Idahoans go on to retire with little to no savings, many will have no choice but to turn to public assistance programs, leading to increased stress on the state’s finances. A grim picture starts to emerge, but adequate individual retirement savings helps keep people off state-funded safety-net programs such as Medicaid, food assistance, and housing thus saving the state money. In fact, according to the Centers for Medicaid and Medicare Services, in 2017-2018, the federal and state government spent $13,900 per year for elderly Medicaid recipients in Idaho.

So why are people not saving more for retirement? It is not because workers do not want to. If only it were that easy. The problem is lack of access.

Employees are fifteen times more likely to save for retirement if they have access to a retirement savings plan at work 3, yet 375,000 (of 630,000) full and part-time Idaho workers did not have access to a workplace retirement plan in 2019 and 78% of Idaho workers in businesses with less than 50 workers do not have a workplace retirement saving plan.⁴

Idaho’s retirement savings crisis effects everyone but disproportionately impacts:

• 75% of agricultural workers who do not have a workplace retirement program;
• minority workers including 68% of Hispanics who do not have access to workplace retirement plans; and
• 59% of younger workers ages 25-44, who tend to also lack this critical access to employer-sponsored retirement plans.⁴

Can you see the grim picture more clearly now?

The good news is that a solution to significantly ease Idaho’s retirement security crisis is within reach. The Idaho House Business Committee began to address the growing retirement savings crisis this legislative session by printing House Bill 180. The retirement program bill is a proposal to create a voluntary state facilitated, auto-Individual Retirement Account (IRA) retirement program for working Idahoans who do not now have access to a payroll deduction retirement plan at their current place of work.

The Idaho Office of Performance Evaluations (OPE) also initiated a report last summer finding workers who do not save for retirement see decreases in their standard of living and use safety net programs more in retirement.

April is Financial Literacy Awareness Month and there is no better time to learn more about retirement savings and how to solve this problem. Giving hardworking Gem State residents and small business owners the tools they need to start saving now while avoiding a crisis later is a win for the future of Idaho.

At AARP Idaho, we believe that a bright and secure retirement should be within reach of every resident in our state.

1 Georgetown University Center for Retirement Initiatives Report, “State Benefits of Expanding Access to Retirement Savings”, https://cri.georgetown.edu/wp-content/uploads/2021/02/CRI-Econsult-State_Benefits_of_Expanding_Access_FINAL.pdf

2 National Institute on Retirement Security, "The Continuing Retirement Savings Crisis", March 2015.

3 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.

4Office of Performance Evaluation, Idaho Legislature, "Preparedness of Idahoans to Retire: Deciding the State's Role", August 2020. Available online: